Lockheed Martin Corp. (LMT) received a contract from the U.S. Air Force under which it will conduct sustainment services for the reentry sub-system of Minuteman III intercontinental ballistic missiles.
This contract carries an initial value of $109 million. Per this contract, the prime designer, manufacturer and sustainer of Minuteman III reentry systems since the 1960s – Lockheed Martin’s work includes repair, modification and testing of hardware and software components in the reentry system-reentry vehicle as well as related support equipment.
This contract, which has a one-year base period of performance and options for an additional four years, is a part of the Air Force's Future ICBM Sustainment and Acquisition Construct. It has been designed to ensure a safe, secure and reliable Minuteman III weapon system through 2030. If all options are exercised, the total contract value would go up to $452 million.
Although the threat of sequestration still lurks over this defense major, negatively impacting the company’s first quarter 2014 sales, Lockheed Martin continues to win both big and small contracts. 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 company has been witnessing rising earnings estimates for 2014 on the back of continuous order flows from the Pentagon’s funding list.
Recently, Lockheed outmatched its rival bidder Raytheon Company (RTN) to clinch a big ticket contract for building a radar system to track space junk. The contract, valued at a whopping $915 million, involves the creation of a radar system at the Marshall Islands located in northern Pacific Ocean.
Currently, Lockheed Martin holds a Zacks Rank #2 (Buy). Other well-placed defense operators include Zacks Ranked #1 (Strong Buy) Embraer S.A. (ERJ) and Zacks Ranked #2 (Buy) Leidos Holdings, Inc. (LDOS).
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