Alliant Techsystems Inc. (ATK) received a $4.5 million limited production phase contract from the U.S. Air Force. The U.S. Air Force has selected two companies for this contract, of which Alliant is one. This contract covers a period of 18 months.

Under the contract, Alliant will modify the High-Speed Anti-Radiation Missile (HARM) for the U.S. Air Force’s HARM Control Section Modification (HCSM) program. The HCSM program adds geo-specific targeting capability to the legacy U.S. Air Force HARM (AGM-88C) control section, providing the capability to attack targets based on their geographic location and locations the Air Force wants to avoid.

The Air Force will evaluate the abilities of both the companies to produce modification kits at the lowest cost and see if they are in compliance with the HCSM program’s technical objectives, during the contract. This evaluation will include both ground and flight tests.

Following the technical evaluation of both companies, the Air Force plans to award a single full-rate production contract at the end of the 18 month period.

Alliant said it will perform work on this program at its facilities in Woodland Hills, California, and Rocket Center, West Virginia. Alliant’s HCSM solution leverages flight-proven and in-production control section hardware from AGM-88E Advanced Anti-Radiation Guided Missile program. The company is already producing AGM-88E missiles for the U.S. Navy and the Italian Air Force.

Minneapolis, Minnesota-based Alliant Techsystems is a premier aerospace and defense company with operations in 24 states, Puerto Rico, and internationally. The company supplies products to the U.S. government agencies, and its prime contractors and sub-contractors. The company also supplies ammunition and related accessories to law enforcement agencies and commercial customers. The company employs more than 18,000 people and earns annual revenues of approximately $4.8 billion.

In the most recent quarter, Alliant reported operating earnings of $2.91 per share, which surpassed the Zacks Consensus Estimate of $2.81. The company bettered the year-ago result by an impressive 72 cents per share.

Alliant anticipates full-year 2011 sales in the range of $4.775-$4.85 billion. The company expects EPS for fiscal 2011 to come in the range of $8.90 to $9.10. The Zacks Consensus Estimate of $9.20 for fiscal 2011 is significantly above the company’s guidance range.

We retain our long term Neutral recommendation on the stock. Also, Alliant currently has a short-term Zacks #3 Rank (Hold), which is in line with its closest peers General Dynamics Corp. (GD) and Raytheon Co. (RTN).

 
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