Boeing Obtains $46 Million Contract For Support Services
This week Boeing (BA) posted news that will help the Aerospace Company net millions in profit. It had stated that it has already received $46 million from the U.S. Air force to perform contract work for Saudi Arabia’s recently purchased F-15SA Eagle fighter bombers.
This contract is a good step for Boeing to receive additional revenue in the military spending area, especially since there was a drop in military spending in the recently announced fourth quarter 2016 earnings report. This might help the company get back on the right track and hopefully boost military revenue in the next earnings report.
Boeing has already made traders a lot of money this year by being up 16.22% year to date. That trend could possibly continue with new business prospects such as this one with Saudi Arabia.
Big Contract
As noted before, Boeing was able to obtain $46 million for a contract with the U.S. Air Force. The contract stipulates that Boeing must provide contract support for the F-15SA Aircraft. More specifically, it must provide support for the Royal Saudi Arabia Airport.
Boeing will also be responsible for replacement parts, and provide support for massive amounts of data. The main reason for Saudi Arabia using the F-15s is to bomb rebel targets in Yemen.
Boost to Earnings
This contract is an important highlight for Boeing, which stands to boost its revenue in the military defense space. While the company isn’t hurting in terms of generating revenue overall, it is having a tough time boosting revenue for the defense aircraft portion of its business. Not too long ago Boeing announced its fourth quarter earnings report.
The company was able to beat on both the top and bottom line of estimates. Boeing reported that it had earned $2.47 per share, which was easily over analysts’ estimate of $2.32 per share. On the revenue side, it was also a beat, but it was very close to the estimate. The company reported that it had earned $23.3 billion, which barely beat analysts’ estimate of $23.1 billion.
Defense Spending
Everything seemed good in the earnings report up until it got the part about defense aircraft and military spending. Both of these had seen a large decline year over year. For example, the revenue from defense spending fell by 18% for the quarter compared to the same period last year.
Military sales were even worse dropping by 34% for the fourth quarter, compared to the same period last year. How does this new contract play a role in helping Boeing? With the company being able to make big contracts such as this it will help boost defense and military spending. That should equate to a boost in defense and military spending revenue reflected in the next earnings report.
What Binary Options Traders Should Watch For
There are a few things that traders should watch – keep an eye on further military deals. While $46 million will go a long way for the company, more deals are probably in the pipeline to boost military and defense spending revenue.
Secondly, traders must observe that Boeing is beating on its earnings reports. This will be a key driver to lifting the stock higher. Considering it is already up 16.22% year to date, it will take a lot to lift the stock higher. Of course, news such as the one posted on Monday with the $45 million contract only helps the stock in the end.
The stock has been trading in a big range between its 52-week low of $120.57 to its 52-week high of $185.71. The stock is currently at $180.93, therefore it is close to its 52-week high. Again, a break above that high won’t happen until there is momentum to carry it higher. The momentum can either come in the form of a strong technical signal, or additional defense revenue deals.
Disclosure: None.