Aerospace and defense major
Lockheed Martin Corp.
) has been able to clinch a major share of Department of Defense
(DoD) contracts awarded on Sep 20, 2013. Of the total $4.95
billion worth of DoD contracts, Lockheed sealed approximately 81%
of the amount, comprising five modification contacts.
The biggest share of these multiple contracts, with a value of
$3.92 billion, would pay for the production of Terminal High
Altitude Area Defense (THAAD) missiles for the U.S. armed forces
and also for United Arab Emirates. The contract definitizes Lot 4
production as well as includes a priced option for Lot 5.
The THAAD system is used to shoot down short, medium, and
intermediate ballistic missiles in their terminal phase using a
hit-to-kill approach. It is the only missile defense system with
the operational flexibility to intercept in both the endo- and
exo-atmospheres thus providing versatile capability to the
The largest defense contractor in the world, Lockheed's customer
base includes the U.S. government, foreign governments, and other
commercial buyers. The company provides sustainment and logistic
services in support of fire control and tactical missile
programs. THAAD is one of the company's core programs.
Apart from this big win, Lockheed has also received a $46 million
modification contract to the previously awarded F-35 Lightning II
low rate initial production Lot VI advance acquisition contract.
The deal facilitates non-recurring technical work required to
support production operation on the F-35 Joint Strike Fighter.
The other three contracts comprised $24.8 million for technical
upgrades on the computer operating system that runs the Air Force
F-22 Raptor fighter jet training systems; $20.5 million for
securing electronic components needed for F-35 production and
sustainment; and finally $10.8 million to give initial non-prime
mission equipment and interim technical support for the F-35
Joint Strike Fighter United States Reprogramming Laboratory.
Despite the cuts in defense spending and the threat of
sequestration, the company has successfully won numerous
contracts from the DoD. Its better-than-expected second quarter
earnings on the back of strong operational performance also drove
the management to raise its full-year earnings guidance to
$9.20-9.50 from $8.80-9.10.
Over the last 60 days, the Zacks Consensus Estimate for 2013
improved 5.1% to $9.48 per share with 13 out of 14 estimates
moving upward. For 2014, 12 out of 16 estimates were also revised
higher over the same time frame, lifting the Zacks Consensus
Estimate by 6.9% to $9.60 per share.
Lockheed Martin presently retains a short-term Zacks Rank #1
(Strong Buy). Other stocks that are also worth considering in the
Northrop Grumman Corp.
Alliant Techsystems Inc.
). While Alliant Techsystems carries a Zacks Rank #1 (Strong
Buy), Northrop and Raytheon hold a Zacks Rank #2 (Buy).
ALLIANT TECHSYS (ATK): Free Stock Analysis
LOCKHEED MARTIN (LMT): Free Stock Analysis
NORTHROP GRUMMN (NOC): Free Stock Analysis
RAYTHEON CO (RTN): Free Stock Analysis Report
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