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Textron Unit Wins $206M Deal for Shadow TUAS Sustainment


Textron Inc.TXT announced that its business unit, Textron Systems Support Solutions, has received a contract from the U.S. Army to provide Contractor Logistics Support (CLS) for the Shadow Tactical Aircraft System (TUAS). The contract is worth $206 million.

The contract will extend Textron Systems Support Solutions' long-standing support for the 117 Shadow systems that have been fielded and deployed by the Army, Marine Corps, Army National Guard and Special Operations Command as well as the Australian Defense Forces. Moreover, the contract will support the Army's Shadow v2 block upgrade program, under which Textron Systems acts as an end-to-end solution provider.

Why Textron?

Textron Systems Support Solutions has gathered decades of knowledge in training military personnel and ensuring system readiness for its customers. The company’s field service representatives work with customers to prepare for mission success.

Details of the Deal

Contract work includes engineering support, contractor logistics support management, field service operations, depot material repair, post-productions software support, and systems sustainment management.

A Brief Note on the TUAS

The Shadow TUAS, which has already exceeded one million flight hours, provides intelligence, surveillance and reconnaissance, communications relay and optional laser designation, and is optimized for manned/unmanned teaming. The system delivers multi-mission support, including a high-bandwidth encrypted data link to carry a range of payloads from high-definition video to secure control for prosecution missions.

The Army is integrating the Shadow v2 system on its Apache helicopter fleet for scouting missions within its combat aviation brigades.

Price Movement

Textron has outperformed the Zacks categorized Aerospace/Defense industry over the last 12 months. The company’s current rate of return is 27.4%, compared to the industry’s average return of 19.7%.

The stock’s outperformance could have been spurred by Textron’s systematic inorganic growth strategy, along with its focus on strengthening international presence. The company’s Industrial revenues increased to $58 million, reflecting the impact of the acquired businesses.

Zacks Rank & Key Picks

Textron currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in this space include Engility Holdings, Inc. EGL, Lockheed Martin Corporation LMT and General Dynamics Corporation GD.

Engility Holdings’ 2017 estimates inched up 0.5% to $2.12 from $2.11 over the last 60 days. On an average, Engility has delivered a positive earnings surprise of 23.19% in the trailing four quarters. The company sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Lockheed Martin’s 2017 estimates inched up 1.2% to $12.63 from $12.48 over the last 60 days. The company flaunts a Zacks Rank #1 as well. It also delivered a positive earnings surprise of 11.36% in the trailing four quarters.

General Dynamics’ 2017 estimates inched up 0.4% to $10.17 from $10.13 over the last 60 days. The company carries a Zacks Rank #2 (Buy) and has delivered a positive earnings surprise of 5.55% in the trailing four quarters.

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