Lockheed Wins $212.3M FMS Contract - Analyst Blog

Lockheed Martin Corp. LMT secured a handful of contracts totaling $253.9 million from the Department of Defense. Of this, the biggest was a foreign military sales modification contract valued at $212.3 million for offering services to the Patriot Advanced Capability-3 (PAC-3) Missile Support Center.

The deal includes foreign military sales to prominent customers like Japan, Taiwan, Germany, Netherlands, Kuwait, and the United Arab Emirates. The contracting activity is the Army Contracting Command, Redstone Arsenal (Missile), Alabama. The tentative date for completion of the order is Dec 31, 2017.

The PAC-missile is one of Lockheed Martin's prime defense offering and has witnessed major upgrades since its inception. The current enhanced version, PAC-MSE, comes with revolutionary advancements like a two-pulse solid rocket motor which provide increased altitude and range performance.

The company's continued product innovation efforts and diversified operations have enabled Lockheed Martin to clinch lofty orders even in the face of harsh budget environment. Back in Apr 2014, the company received a whopping $611 million production order for PAC-3 MSE missiles and Launcher Modifications Kits.

We believe increasing threats from Iran and North Korea and rising political tensions in the Middle East will continue to bring in orders from allied countries. Qatar is the latest customer the company successfully added to its portfolio. Apart from PAC-3, the company's THAAD missiles have also caught interest of the Gulf countries which are on a military spending spree.

With a stable funding level for Missile segment in the proposed fiscal 2015 U.S. budget, Lockheed Martin's broad range of missile products will lend consistency to its future profitability.

Currently, Lockheed Martin holds a Zacks Rank #2 (Buy). Other better-ranked defense players include The Boeing Co. BA, Embraer SA ERJ and Huntington Ingalls Industries, Inc. HII. All these stocks hold the same rank as Lockheed Martin.