America’s 15 Biggest Defense Contractors
6. McKesson Corp. (NYSE: MCK)
> 2017 funding obligations: $8.80 billion
> Market Cap: $29.66 billion
> Total Revenue: $208.36 billion
> Net Income: $67 million
> Shares outstanding: 202.05 million
> Employees: 78,000
McKesson primarily distributes medical and pharmaceutical supplies for health care providers and pharmacies around the world. The company is the pharmaceutical prime vendor (PPV) for the Department of Veterans Affairs. Its current contract ends on August 9, and there is a two-year option remaining that the VA may exercise. The contract, originally awarded in 2012, has generated average annual revenue of around $4 billion and could generate a total of $44 billion if extended to 2020. For the current fiscal year, analysts forecast revenue of $216.15 billion and have a 12-month consensus price target on the stock of $171.60.
7. Huntington Ingalls Industries Inc. (NYSE: HII)
> 2017 funding obligations: $7.24 billion
> Market Cap: $9.51 billion
> Total Revenue: $7.44 billion
> Net Income: $479.00 million
> Shares outstanding: 44.79 million
> Employees: approximately 38,000
Huntington Ingalls builds the single most expensive and largest military weapon in the U.S. arsenal, the Gerald R. Ford-class aircraft carrier. The first of four new carriers on order, the Ford was commissioned last year after the company spent $13 billion to build the ship. The fiscal 2019 budget includes $4.5 billion for continuing work on the second and the third carriers that will be christened the John F. Kennedy and the Enterprise. A name has not been selected for the fourth. Eventually, the Ford-class carriers are expected to replace the Navy’s entire current Nimitz-class fleet of 11, guaranteeing Huntington Ingalls a solid decade or so of work. For the current fiscal year, analysts forecast revenue of $7.63 billion and have a 12-month consensus price target on the stock of $254.64.
8. Bechtel Group Inc.
> 2017 funding obligations: $5.53 billion
> Market Cap: N/A
> Total Revenue: $32.90 billion (2016)
> Net Income: N/A
> Shares outstanding: N/A
> Employees: N/A
Bechtel, an engineering and construction firm, is the only privately held company on this list of top defense contractors. In 2015, the company’s largest federal contracts were valued at $2.48 billion with the U.S. Navy and $1.73 billion with the U.S. Department of Energy. Both were related to work on nuclear reactors. The company’s 10-year contract with the Navy, valued at a total of $12.8 billion, expires this year. On the non-military side, Bechtel has worked on two massive liquefied natural gas (LNG) liquefaction facilities: the Sabine Pass project offshore of Louisiana and the Wheatstone project offshore of Northwest Australia. No estimates for the company’s total revenue are available.
9. BAE Systems plc
> 2017 funding obligations: $5.29 billion
> Market Cap: £26.07 billion
> Total Revenue: £18.32 billion
> Net Income: £1.36 billion
> Shares outstanding: 3.19 billion
> Employees: 83,200
BAE is the only non-U.S.-based company among top federal contractors. The British company just won a $198 million contract from the U.S. Marine Corps to build an initial batch of 30 wheeled amphibious combat vehicles out of a planned total of 208. If all are built the contract will be worth about $6.2 billion to BAE, including $1.2 billion to manufacture the vehicles and $5 billion to maintain them over their expected lifespan. For the current fiscal year, analysts forecast revenue of £18.5 billion and have a 12-month consensus price target on the stock of £6.73 per share.
10. L3 Technologies Inc. (NYSE: LLL)
> 2017 funding obligations: $5.15 billion
> Market Cap: $15.04 billion
> Total Revenue: $9.57 billion
> Net Income: $753.00 million
> Shares outstanding: 78.22 million
> Employees: approximately 31,000
L3 makes a wide range of electronic, sensor, and communications systems for military, homeland security, and commercial platforms. The company is also a prime contractor of aerospace systems, security and detection systems, and pilot training. Last year the company won a contract as the systems integrator to modernize the U.S. Air Force’s Compass Call EC-130H aircraft. Despite a Boeing protest, L3 chose General Dynamics’ Gulfstream 550 as the airplane that would carry the sophisticated Compass Call electronic warfare gear. No value for the contract has been released. For the current fiscal year, analysts forecast revenue of $9.99 billion and have a 12-month consensus price target on the stock of $236.93.