GE Procures Plum Aviation Contract For Australian Project

GE Aviation, one of the operating segments of industrial goods manufacturer General Electric Company GE, recently procured a $9.7 million contract from the U.S. Navy. The contract entails the aviation division to obtain conversion kits for the Australian government's F/A-18 aircrafts.

Manufactured by The Boeing Company BA, the F/A-18 aircraft is a state-of-the-art tactical aircraft in the U.S. Navy inventory. It offers cutting-edge multi-role strike fighter capability and flexibility to perform virtually every mission in the tactical spectrum. These include day/night strike with precision-guided weapons, fighter escort, close air support, suppression of enemy air defenses, maritime strike, reconnaissance, forward air control and tanker missions.

Australia has a fleet of more than 70 1980s-era F/A-18 Hornets and 24 F/A-18F Super Hornets, which are essentially a new model of aircraft. GE Aviation makes electric power generators and related systems for military and civilian aircraft. This will help the Australian government to gradually phase out the F/A-18 with F-35 aircrafts.

The contact will be executed by GE Aviation's Vandalia facility in Dayton region. GE Aviation has three plants in Dayton with 1,300 employees combined and such contracts will keep the business humming in the region. Additionally, the deal is likely to augment the revenues of the company as it aims to script a turnaround in 2018.

Shares of GE have underperformed the industry year to date, with an average loss of 44.8% significantly wider than a decline of 4.1% for the latter. In order to boost the company's sagging shares, CEO John Flannery has decided to focus on just three core segments — power, aviation and health-care equipment — and gradually exit all other businesses.

GE further intends to sell assets worth $20 billion to improve liquidity and reduce overhead costs by $2 billion in 2018, majority of which is likely to come from the beleaguered power segment that sells electrical generation equipment. In addition, GE has also halved its dividend. Flannery has termed 2018 as a reset year and expects the company to stage a turnaround to reward its shareholders with risk-adjusted returns. Critics, however, have widely raised concerns about the efficacy of such steps.

GE currently has a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the industry include 3M Company MMM and Raven Industries, Inc. RAVN, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

3M has a long-term earnings growth expectation of 10.2%. It has surpassed estimates thrice in the trailing four quarters with an average positive surprise of 2.5%.

Raven has an expected long-term earnings growth rate of 10%. It has exceeded estimates thrice in the trailing four quarters with an average beat of 25.8%.

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