As most of America was preparing to flip its calendars last month, two defense contractors were hitting afterburners -- and blasting into the new year. Last week, the U.S. and Saudi Arabian governments finalized their contract for the sale of nearly $30 billion worth of fighter jets manufactured by Boeing
Of course, Boeing is not the only company that will benefit from this deal. General Electric
It was not, however, the only big defense deal making headlines last month. Just a couple weeks earlier, we learned that Japan had chosen Boeing rival Lockheed Martin
Devils in the details
Figuring out which of these deals is "bigger" is no easy task. Reportedly, Lockheed's deal involves 42 aircraft, valued at more than $7 billion. But considering that the F-35 is a more advanced fighter jet than the F-15, you'd expect it to cost more. After all, the Saudi sale involves just twice as many planes sold (84 new F-15s), and fewer than twice as many old jets being upgraded (70 older F-15s) -- yet is priced at more than four times the $7 billion Japan is shelling out for its F-35s.
What's the catch? My guess is that the reporting on the Japan sale doesn't factor in training costs, spare parts, or service costs, while the Saudi number most likely does. (This is a recurring theme in defense announcements, which often makes apples-to-apples comparisons difficult.)
What is clear is that both deals are big news. By choosing the F-35, Japan essentially waved off a flight of F/A-18 fighters that Boeing had offered to sell it. That's a loss for Boeing, and one that will only grow in magnitude as Japan presumably orders more and more F-35s over time.
On the other hand, by landing the Saudi sale, Boeing put off once again the date when it becomes irrelevant to the global arms market. It postponed the era in which former Chairman of the Joint Chiefs of Staff Admiral Mike Mullen famously declared the F-35 could be the last manned fighter jet the U.S. will ever build.
As it turns out, Boeing's going to be building fighter jets for many years to come.
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Fool contributor Rich Smith holds no position in any company mentioned above, but The Motley Fool owns shares of General Dynamics and Lockheed Martin. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.