Lockheed Martin Corp. (LMT), the prime defense contractor to the Pentagon, received multiple contracts worth $276.5 million on Dec 22.
The largest order by value is a $244 million modification contract to ensure that labor and material costs of 61 units of C-130J aircraft is reduced through the procurement of raw materials by the company. The work is expected to be over by Jan 31, 2020.
The second contract is worth $23.8 million. Per this modification contract, Lockheed will supply one KC-130J weapon systems trainer for support equipment and technical data. The work is expected to be over by Oct 30, 2017.
The third contract, valued at $8.7 million, requires Lockheed to support technical evaluation of the Remote Minehunting System with the Littoral Combat Ship under a Basic Ordering Agreement. The work is expected to conclude by Nov 2015.
Under the new defense budget, Lockheed will receive $224 million for two additional F-35 Lightning II Joint strike Fighter (“JSF”) jets for the U.S. Air Force. It will also get $255 million for two more F-35s for the Navy, bringing the total to 38 units of F-35 fighters for fiscal 2015. This compares with 29 units of F-35 fighter jets in fiscal 2014.
The company’s diverse product offering guarantees a steady flow of contracts from the Pentagon as well as the allied countries. Recently, the company won a contract worth $308.3 million from the Taiwan government (read more: Lockheed Martin Secures $308M Foreign Military Sales Deal).
These contracts will help the company deliver strong results going forward. The company has been consistently beating earnings estimates for the last four quarters, delivering a surprise of 13.24% on an average. On its third-quarter earnings call, the company stated that its 2014 earnings will touch the high end of the previously guided range of $10.85–$11.15 per share. The projected earnings are higher than $10.89 per share earned in 2013.
Lockheed currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry include The Boeing Company (BA), Engility Holdings, Inc. (EGL) and General Dynamics Corp. (GD), each holding a Zacks Rank #2 (Buy).
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