Lockheed Martin (LMT) Gets $10.6M Modification Contract

Lockheed Martin Corporation LMT announced that it was awarded a $10.6 million modification contract to work on missile repairs. Operations related to the deal will be carried out at Grand Prairie, TX, and is expected to finish by Jun 1, 2018.

The contract will use fiscal 2017 operations and maintenance (Army) funds. The deal was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL.

A Brief Note on Lockheed's missile defense system

The company's Missiles and Fire Control MFC segment provide  high-end tactical combat missiles like Patriot Advanced Capability-3 (PAC-3),Terminal High Altitude Area Defense (THAAD), Hellfire, Joint Air-to-Surface Standoff Missile (JASSM), Aegis Combat System and a few more. These products witness high demand in the domestic front and in the international market as well.

MFC's net sales in the first quarter of 2017 increased 4%, compared with the year-ago period. Going ahead, management expects net sales from this segment to grow in the mid-single digit range in 2017, compared with 2016, which will be driven by Lockheed Martin's air and missile defense programs. We believe that such contracts will substantially contribute to the company's growth.

Regular Inflow of Contracts

As one of the largest defense contractors in the world, Lockheed Martin has a strong order book which ensures steady cash inflow.

The company won a contract of $413.9 million from the U.S. Air Force for the production of the 15th lot of Joint Air-to-Surface Standoff Missile-Extended Range (JASSM-ER). (Read more: Lockheed Martin Secures $414M Contract for JASSM-ER)

Earlier in May, the Rotary and Mission Systems (RMS) business segment of the company won a Navy contract to offer technical and program management support services for $80 million.  These services will be provided in relation to the navigation subsystems of Lockheed's Trident II (D5) Shipboard Systems Integration SSI Increments four and eight. (Read more: Lockheed Wins Trident II Support Services Deal Worth $80M)

Peers in News

Presidents Trump's proposed 10% hike in fiscal 2018's defense budget from 2016's level has been received positively by the defense industry.

Northrop Grumman Corp. NOC recently clinched a contract of $243.9 million to provide 72 Active Electronically Scanned Array (AESA) radars and spares. Per the terms, the defense giant will also offer support services related to these radar systems. (Read more: Northrop Grumman Wins $244M Deal to Offer AESA Radars)

Orbital ATK OA announced that it has been awarded an initial $90 million contract from Northrop Grumman to supply parts for the B-2 Spirit stealth bomber. (Read more: Orbital ATK Gets $90M Deal for B-2 Spirit Stealth Bomber)

Price Movement

In the last three months, shares of Lockheed Martin have gained 3.4%, outperforming the Zacks categorized Aerospace/Defense industry's gain of 3.2%. The company has a solid presence in domestic and international markets which boosts its performance.

Zacks Rank and Other Stocks to Consider

Lockheed Martin currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Leidos Holdings, Inc. LDOS, carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Leidos Holdings delivered a positive earnings surprise of 12.82% in the first quarter. Its Zacks Consensus Estimate for 2017 moved up nearly 2.2% to $3.30 per share in the last 60 days.

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