Defense major, Lockheed Martin Corp. (LMT) won a modification contract worth $67.8 million from the U.S. Air Force for providing services on the F-22 aircraft. The contract work is expected to be over by 2015 end.
The F-22 is a single-seat, dual-engine, super maneuverable fifth-generation fighter jet that uses stealth technology.
The F-22 was pressed into service in 2005. Since then, the F-22 aircraft has won a decent number of contracts. In Oct 2014, Lockheed won a $486.5 million modification contract for the F-22 jets. Previously, in 2013, it was awarded a $6.9 billion contract by the Pentagon to upgrade F-22 air fighters.
Lockheed’s diverse range of products, enhanced operational capabilities and punctuality are factors that guarantee a steady flow of contracts.
Earlier this month, Lockheed won a $244 million modification contract from the Pentagon to ensure that labor and material costs of 61 units of the C-130J aircraft is reduced through the procurement of raw materials by the company.
In the fourth quarter, the company received sizeable international as well as domestic contracts. The company recently won a contract worth $308.3 million to provide the Taiwan government with 144 Active Electronically Scanned Array radars. It also secured a contract from the Poland Ministry of Defence to supply joint air-to-surface standoff missiles (“JASSMs”) for its fleet of 48 F-16 fighter jets. The contract is worth $250 million. This deal was approved by the U.S. Congress in Oct 2014.
Besides deals from the Pentagon, Foreign Military Sales (“FMS”) remain the catalyst to fuel top-line growth for the defense primes. Nearly 17% of Lockheed’s 2013 revenues had come in from international customers. The company expects its annual international sales to increase to 25% in the coming years on account of rising demand for the F-35 and other missile defense systems.
The company has consistently beaten earnings estimates for the last four consecutive 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. Projected earnings are higher than $10.89 per share earned in 2013.
Lockheed currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the sector include The Boeing Company (BA), General Dynamics Corp. (GD) and Rockwell Collins Inc. (COL), each holding a Zacks Rank #2 (Buy).
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