Defense giant Lockheed Martin Corp’s (NYSE:LMT) business unit, Sikorsky Aircraft recently won a modification contract from the U.S. Army for the sale of 24 UH-60M Black Hawk aircraft to the Taiwan government. The contract is valued at $135.4 million and was awarded by the Army Contracting Command, Redstone Arsenal, AL.
Work is scheduled to be complete by Oct 8, 2018 and will be executed inStratford, CT. The contract will use fiscal 2016 other procurement funds.
The UH-60M Black Hawk
Originally developed and manufactured by Sikorsky, the UH-60M is a modified version of the renowned Black Hawk family of helicopters that supports multi-mission tactical operations. It is a twin-engine copter with four blades and an improved durability gearbox.
This medium-lift utility chopper offers fail-safe service, during both day and night, in the harshest weather conditions, anywhere in the world. Among other models of the Black Hawk, UH-60M is the most efficient, thanks to its integrated digital cockpit, moving map display, enhanced GPS/INS system and fully coupled flight controls and superior vertical lift.
Our View
Last November, Lockheed Martin bought Sikorsky Aircraft – one of the primary industry leading helicopter manufacturers in the U.S. – from United Technologies Corp. (NYSE:UTX) for $9 billion in cash. The deal positioned Lockheed as the world’s largest defense contractor, particularly with the addition of Sikorsky’s world-known product, Black Hawk along with a handful of other combat as well as commercial choppers, to its helicopter product line.
We note that in the second quarter of 2016, Lockheed Martin witnessed year-over-year sales growth of 11%, majority of which was due to the Sikorsky buyout. Going ahead, management expects to witness even better cash flows from Sikorsky in 2018, indicating further expansion of the unit in the days to come.
Stocks to Consider
Lockheed Martin currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the aerospace and defense sector include Engility Holdings, Inc. (NYSE:EGL) , General Dynamics Corporation (NYSE:GD) and Ducommun Inc. (NYSE:DCO) . While Engility and Ducommun sport a Zacks Rank #1 (Strong Buy), General Dynamics carries a Zacks Rank #2 (Buy).
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