Lockheed Gets Army Contract - Analyst Blog

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Lockheed Martin Corporation ( LMT ) was awarded a $50.2 million cost-plus-fixed-fee incrementally-funded contract. This increment is worth $6.3 million. The award will involve data transport and telecommunications services. Work on the contract will be performed in Washington, D.C., with an estimated completion date of Sep 30, 2013. The Army Contracting Command, Rock Island, IL, is the contracting activity.

Lockheed Martin is the largest U.S. defense contractor with a platform-centric focus and a steady inflow of follow-on orders due to its leveraged presence in the Army, Air Force, Navy and IT programs. However, the ongoing trend of governmental delays in program decisions and even program cancellations have affected the fortunes of the defense industry in general and Lockheed Martin in particular.

Lockheed Martin finished 2012 with $82.3 billion of order backlog, including $19.8 billion of new orders booked in the fourth quarter. Of this $30.1 billion belonged to the Aeronautics segment and $18.1 billion to the Space Systems segment. The rest is made up of $14.7 billion for the Missiles and Fire Control segment; $10.7 billion for Mission Systems and Training; and $8.7 billion for the Information Systems & Global Solutions.

Lockheed Martin is a well-managed defense prime. Its working capital improvements continue to impress, as is evident from its inventory turnover of 16.1 times in the trailing twelve months at the end of 2012, compared to only 3.1 times for the Zacks industry average - a strong sign of operational efficiency. In addition, Lockheed's operational effectiveness is evident in its industry-high Return on Investment of 34.9% in 2012.

Lockheed Martin has one of the strongest balance sheets among its peers, with a stable long-term debt-to-capitalization of 80.2% at the end of 2012. Lockheed continues to be a strong cash generator with its operating cash flow reaching approximately $1.6 billion during 2012.

Lockheed's premier position in the defense space is upheld by the company's solid 2013 guidance. Lockheed Martin forecast full-year 2013 earnings per share in the range of $8.80-$9.10 on net revenues of $44.5-$46.0 billion.

Lockheed Martin is a Zacks Rank #2 (Buy) stock. The past 60 days have seen 12 of the 13 earnings estimates for full year 2013 moving up despite an industry-wide threat of budget cutbacks and effects of sequestration. This has affected the fortunes of defense companies like Wesco Aircraft Holdings, Inc. ( WAIR )

Other than Lockheed Martin, Zacks Rank #2 (Buy) stocks in the defense space include The Boeing Company ( BA ), and FLIR Systems, Inc. ( FLIR ).

BOEING CO (BA): Free Stock Analysis Report

FLIR SYSTEMS (FLIR): Free Stock Analysis Report

LOCKHEED MARTIN (LMT): Free Stock Analysis Report

WESCO AIRCRAFT (WAIR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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