Defense prime Lockheed Martin Corp. (LMT) ended 2014 on an upbeat note with a big contract from the Pentagon’s funding list. The company won a $662.0 million modification contract from the U.S. Air Force.
Per the contract, Lockheed Martin will get funds for the procurement of two MC-130J, two HC-130J, three KC-130J, one C-130J, two U.S. Coast Guard HC-130J production aircraft, and 20 quick engine change assemblies. The contract is expected to run through Jan 31, 2018, and will be carried out in Marietta, GA. Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, OH is the contracting activity.
Apart from this big ticket program, Lockheed Martin also secured two additional contracts. The one from the Missile Defense Agency is worth $91.1 million. Lockheed Martin’s Space Systems Company received this modification contract for United Arab Emirates Terminal High Altitude Area Defense (“THAAD”) to acquire continental U.S. and outside continental U.S. support for services and equipment, to field the THAAD Weapon System.
With this modification, the total cumulative face value of the Foreign Military Sales contract has mounted to $440.8 million from $349.7 million. Work will be performed at Las Cruces, NM; Huntsville, AL; Sunnyvale, CA and United Arab Emirates. The contract is slated for completion by Oct 31, 2019.
Another contract, worth $78.2 million, went to Lockheed Martin Missiles and Fire Control unit from the U.S. Army for a service life extension program (“SLEP”) for the Army tactical missile system (“ATACMS”). The SLEP is a follow-on order to leverage existing, service life-expired ATACMS Block I missiles into policy compliant area attack munitions. This contract will run through Dec 29, 2018.
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 $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. It also won a contract worth $308.3 million to provide the Taiwan government with 144 Active Electronically Scanned Array radars.
These contracts will aid 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 Martin currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the space include Spirit AeroSystems Holdings, Inc. (SPR), The Boeing Co. (BA) and General Dynamics (GD). Spirit AeroSystems carries a Zacks Rank #1 (Strong Buy), while Boeing and General Dynamics hold a Zacks Rank #2 (Buy).
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