Prime defense contractor Lockheed Martin Corp. LMT has nabbed a major U.S. Air Force contract for C-130J military transport aircraft. The Pentagon awarded the contractor with the $1.53 billion deal, to procure titanium and other long-lead materials required to build 28 C-130J military transport aircraft.
The latest modification contract is part of a $5.3 billion multi-year contract for 78 C-130J Super Hercules that was awarded to Lockheed Martin last December. However, the latest modification contract would fund 28 C-130Js models comprising 14 typical C-130J, 8 MC-130J special operation variants, and 5 search-and-rescue HC-130J variants.
The contract will run through July 31, 2019 and be funded by the fiscal 2016 defense budget.
The latest model in Lockheed Martin’s Hercules family – C-130J Super Hercules – is a four-engine turboprop military transport aircraft. The Hercules family has the longest continuous production run of military aircraft in history. C-130J's crew includes two pilots and one loadmaster (no navigator or flight engineer is required).
The J-model is almost similar to the classic Hercules in terms of general appearance. However, it uses updated technology like the new Rolls-Royce AE 2100 D3 turboprops with Dowty R391 composite scimitar propellers, digital avionics and needs reduced crew. These improvements boosted its performance over its C-130E/H predecessors with 40% greater range, 21% higher maximum speed and 41% shorter take-off distance.
Recently, Lockheed Martin has won a modification contract, worth $106 million, from the U.S. Air Force for the C-130J multi-year production aircraft. The contract will provide procurement funding for long-lead efforts related to 11 fiscal 2017 C-130J aircraft in the following configuration: 2 C-130J-30, 3 HC-130J, 5 MC-130J and 1 KC-130J.
Lockheed Martin is the largest U.S. defense contractor with a platform-centric focus that guarantees a steady inflow of follow-on orders from its leveraged presence in the U.S. Army, Air Force, Navy and IT programs.
In fact, the company holds significant potential given the positive budget revision for fiscal 2016 and fiscal 2017. The fiscal 2016 budget reflects an annual increase of approximately $25 billion. This is also the first increase in the annual DoD budget since 2012. Importantly, the budget represents a double-digit annual percentage increase in investment accounts to fund new equipment procurement and research and development activities.
Zacks Rank
Lockheed Martin currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include Huntington Ingalls Industries, Inc. HII, Rockwell Collins Inc. COL and Spirit AeroSystems Holdings, Inc. SPR, each carrying a Zacks Rank #2 (Buy).
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