Our nation depends on a continuing effort to stay ahead of the curve and be proactive regarding the defense our country every day.
As budget cuts in defense have been looming and are slated to take place starting in 2014, our nation’s aerospace firms are bracing for what could be the first major shift in 50 years. The list of affected firms stretches across the US as the defense budget in 2014 will take a hit of at least 20 billion dollars.
I have listed the 10 largest companies in the Aerospace and Defense sector, this is important to know as the trickledown effect from the defense budget will directly affect these companies. They are listed in order of Market share of the work. Chances are that you know someone that is associated with one or more of these companies.
1. United Technologies (UTX): 76.6B market cap, P/E Ratio 16.04, 2.3% dividend, +6.86% year-to-date
UTX is involved in everything from elevators and escalators to helicopters and fuel cell systems.
2. Boeing (BA): 55.2B market cap, P/E ratio 18.42, 2.25% dividend, +15.9% year-to-date
Among other things, BA researches and develops military aircraft and helicopters as well as space missile systems.
3. Lockheed Martin (LMT): 26.4B market cap, P/E ratio 8.56, 2.88% dividend, +11.2% year-to-date
LMT businesses include space, telecommunications, electronics, aeronautics and energy.
4. General Dynamics (GD): 26.2B market cap, P/E ratio 10.19, 2.65% dividend, +0.71% year-to-date
Combat vehicles, weapons systems and munitions and even shipbuilding are among GD products and services.
5. Precision Castparts (PCP): 21.9B market cap, P/E ratio 21.8, .08% dividend, +10% year-to-date
Finally, perhaps one you haven't heard of: PCP manufactures metal components and products, parts used in jet engines.
6. Northrop Grumman (NOC): 18.5B market cap, P/E ratio 9.75, 3.14% dividend, +9.6% year-to-date
NOC provides aerospace, electronics, information systems and shipbuilding to global government and commercial customers.
7. Raytheon (RTN): 17.5B market cap, P/E ratio 8.72, 3.53% dividend, +7.09% year-to-date
RTN provides mission systems integration for communications and intelligence systems as well as mission support services.
8. Goodrich (GR): 10.56B market cap, P/E ratio 16.82, 1.36% dividend, -3.3% year-to-date
Passenger restraint systems, pump and engine control, de-icing systems and aircraft evacuation systems are among the GR offerings and products.
9. Rockwell Collins (COL): 9.1B market cap, P/E ratio 16.30, 1.61% dividend, +3.14% year-to-date
In addition to communications and avionics, COL produces in-flight entertainment systems.
10. L-3 Communications Holdings (LLL): 8.4B market cap, P/E ratio 9.39, 2.26% dividend,+13.9% year-to-date
Command, control, communications, intelligence and surveillance and reconnaissance systems. Main customers are government agencies.
As a result of these cuts, almost all of the companies listed above have taken steps to align themselves with commercial work to pick up the slack. However, the commercial sector in the aerospace industry does not have enough durable goods orders to offset the cuts.
Several of the big 6 airlines have plans to upgrade the current fleet of aircraft in the next 5 years. That should help at least keep aerospace vendors in business while the government gets through the budget cuts.
Aerospace Industries Association sources agree that U.S. budget cuts could also further delay an overhaul of the U.S. air traffic control system that would help airlines navigate crowded air routes – this project requires about $1 billion a year in spending. Airline executives have also expressed their concerns about the impact of budget cuts on air traffic control towers in the US.
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