Lockheed Martin Aeronautics Company, a key division of
Lockheed Martin Corporation
), received a modification contract worth $122.1 million from the
U.S. Department of Defense (DoD).
This latest contract entailed the procurement of initial aircraft
spares for the F-35 Lightning II Joint Strike Fighter (JSF)
aircraft for the U.S. Marine Corps, U.S. Air Force, U.S. Navy and
other international partners. Work under this contract is scheduled
to complete by Dec 2016.
Development costs for the highly advanced and expensive F-35 JSF
program are shared by the U.S. and its allies. As of Dec 31, 2013,
the total estimated acquisition cost (the sum of development,
procurement, and military construction costs) of the F-35 program
was estimated at $323.5 billion.
The fiscal 2014 U.S. defense authorization bill funded F-35
procurement at $5.4 billion for 29 aircraft and $561.7 million in
advance procurement. In addition, the fiscal year 2015 defense
budget bill funded F-35 procurement at $7.8 billion for 34
The U.S. has plans to acquire 2,457 JSFs for its Air Force, Marine
Corps, and Navy at an estimated acquisition cost of approximately
$319.0 billion. In addition, hundreds of F-35s are expected to be
acquired by several U.S. allies.
Since so many orders need to be fulfilled, Lockheed Martin, the
prime contractor of the F-35 program, is assured of receiving F-35
program-related orders at regular intervals.
Despite persistent threats of defense budget cuts, Lockheed Martin
continues to receive consistent orders from the DoD. This has
helped the company to register positive earnings surprises in the
last four quarters with an average beat of 20.2%. For 2014, the
company boosted its earnings forecast to the range of $10.50-$10.80
from the earlier expectation of $10.25-$10.55. The current Zacks
Consensus Estimate for 2014 is pegged at $10.98 with all estimates
going up in the last 60 days.
Currently, Lockheed Martin holds a Zacks Rank #3 (Hold). Other
well-ranked defense players include
Leidos Holdings, Inc.
). While Embraer holds a Zacks Rank #1 (Strong Buy), CAE and Leidos
Holdings carry a Zacks Rank #2 (Buy).
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