Pentagon's prime contractor,
Lockheed Martin Corp.
) won two contacts from the U.S. Department of Defense (DoD) on
Friday, Jan 31, 2014.
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The larger of the two contracts is worth $105.3 million. In this
modification contract Lockheed Martin will continue to provide
logistical, program management, and engineering support for the
U.S. Air Force's C-130J Super Hercules transport planes under the
C-130J Long-Term Sustainment Program for one added extra year.
Work on the contract will be executed at Marietta, Ga., and will
run through Jan 31, 2016.
The second award is a $48.9 million "ceiling requirements"
foreign military sales ("FMS") contract for C-130J Long Term
Sustainment Support. Under the program head, Lockheed Martin will
provide the Royal Norwegian Air Force with return and repair
support and spare parts support, along with engineering, in
country representative and modification support. Work on this
contract is slated to be completed by Nov 30, 2018.
Recently, Lockheed Martin reported impressive fourth quarter 2013
results, beating both earnings and revenue estimates. Also, the
company continued to grow its backlog and generate strong cash
from operations while maintaining its cash deployment strategy.
The company continues to receive contracts from the DoD, ranging
from big to small tickets. Despite the uncertainty plaguing the
industry, the company has been able to generate $15.4 billion in
orders in the fourth quarter of 2013. Going forward, varied
product offerings, strong program execution and cost reduction
measures will help the company to sustain its profitability.
That said, Lockheed Martin will largely have to depend on the
success of its F-35 fighter jet program as well as FMS contracts
to counter the harsh domestic budget environment. Most of the
company's top line is expected to come from foreign governments
over the next five years. The company is confident of selling its
high-priced F-35 fighter jets to foreign clients, which would to
some extent compensate for lower defense spending at home.
Other defense contractors like
) are also focusing on overseas sales to counter domestic budget
pressure. Best known for its missile defense systems, such as the
Patriot, Raytheon's international business is now expected to
garner close to 30% of total revenues this year.
Lockheed Martin currently carries a Zacks Rank #2 (Buy). Other
defense stocks also worth considering include
Northrop Grumman Corp.
), both with a Zacks Rank #2 (Buy).