Lockheed Martin Corporation
(
LMT
) was allotted three contracts worth $4.8 billion by the Naval
Air Systems Command related to the F-35 Lightning II Joint Strike
Fighter ("JSF") program.
The F-35 Lightning II is a family of single-seat, single-engine,
fifth generation multi-role fighters that are designed for ground
attack, reconnaissance, and air defense missions with stealth
capability. It is the next-generation strike aircraft for the
Navy, Air Force, Marines and U.S. allies.
Of the three, the largest contract is a $3.7 billion award for
the procurement of 31 fighters. Among the fighters, 18 would be
conventional take-off and landing aircrafts for the Air Force; 6
short take-off vertical landing aircrafts for the Marine Corps;
and 7 Carrier Variant aircrafts for the Navy. Work on the
contract will be performed in Fort Worth, Texas (35%); El
Segundo, California (25%); Warton, United Kingdom (20%); Orlando,
Florida (10%); Nashua, New Hampshire (5%); and Baltimore,
Maryland (5%). Lockheed expects to deliver by February 2015.
Apart from this, Lockheed also received two contracts worth
approximately $1.1 billion for spares and sustainment of the F-35
Joint Strike Fighter program. Of the two, the bigger one worth
$753.4 million is to provide non-recurring sustainment and
logistics support for delivered and projected air systems. Work
will be performed in Fort Worth, Texas (35%); El Segundo,
California (25%); Warton, United Kingdom (20%); Orlando, Florida
(10%); Nashua, New Hampshire (5%); and Baltimore, Maryland (5%).
Lockheed expects to finish work on this contract by December
2015.
The other contract worth $374.5 million is for the manufacture
and delivery of initial air vehicle spares. Work for this
contract will be performed in Fort Worth, Texas (35%); El
Segundo, California (25%); Warton, United Kingdom (20%); Orlando,
Florida (10%); Nashua, New Hampshire (5%); and Baltimore,
Maryland (5%). The company expects to finish work on this
contract by November 2015.
Based in Bethesda, Maryland, Lockheed Martin is a global security
and aerospace company, engaged in the research, design,
development, manufacture, integration and sustainment of advanced
technology systems, products and services. Key growth drivers of
the company are its focus on debt repayment, an ongoing share
repurchase program and the incremental dividend. Some of Lockheed
Martin's main competitors are
The Boeing Company
(
BA
) and
General Dynamics Corporation
(
GD
).
Going forward, we believe Lockheed Martin has significant upside
potential based on the Obama administration's focus on
Intelligence Surveillance Reconnaissance ("ISR"), unmanned
systems, force protection, cybersecurity, and missile defense. It
already possesses an order backlog of approximately $75.6 billion
at the end of the first nine months of 2012.
Further, we expect shareholder return to continue to be enhanced
owing to the company's focus on debt repayment, its ongoing share
repurchase program and the incremental dividend.
However, we are concerned about the budget deficits and political
uncertainty that make future defense budgets vulnerable to
cutbacks. Lockheed Martin presently retains a short-term Zacks #3
Rank (Hold) that corresponds with our long-term Neutral
recommendation on the stock.
BOEING CO (BA): Free Stock Analysis Report
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LOCKHEED MARTIN (LMT): Free Stock Analysis
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