Lockheed Martin (LMT) Wins $117M Contract For LRFD Delivery

Lockheed Martin Corp. (NYSE:LMT) recently secured a $117-million modification contract under the foreign military sales (FMS) program for the delivery of Modernized Laser Range Finder Designators (LRFD) to support Netherlands’ AH-64 Apache (NYSE:APA) helicopter. The contract was awarded by the U.S. Army Contracting Command, Rock Island Arsenal, Illinois.

Lockheed Martin will utilize fiscal 2018 foreign military sales and aircraft procurement funds and Army funds to complete the task. Work related to the deal is scheduled to be completed by Aug 31, 2020. Operations related to the deal will be carried out in Orlando, FL.

A Brief on LRFD

The modernized LRFD provides pilots with long-range, precision engagement and pilotage capabilities for safe flight during day, night and adverse weather missions. LRFD is also the chief targeting aid for Boeing's (NYSE:BA) AH-64 Apache helicopter, establishing the range to target for accurate weapon aiming.

What’s Favoring Lockheed Martin?

Lockheed Martin enjoys a steady flow of contracts from the Pentagon. The company recently acquired a $211-million contract for upgrading its F-35 fighter jet and secured a $1.5-billion deal for delivering F-35's Spare Parts last month. Notably, Lockheed Martin’s Aeronautics segment witnessed 13% year-over-year sales growth in 2017.

We may expect such contract wins, like the latest one, to boost the Aeronautics segment, which in turn will reflect similar solid performance in the first quarter of 2018 and beyond.

Moreover, in February 2018, President Trump proposed fiscal 2019 defense budget that provisions for a spending plan of $21.7 billion on Aircraft related programs. Such a significant budget spending policy reflects solid growth prospects for Lockheed Martin’s Aeronautics segment in coming days.

Price Movement

Lockheed Martin’s stock has returned about 29.7% over a year, compared with the broader industry’s gain of 50.1%. The underperformance may have been caused by the intense competition that the company faces in the aerospace-defense space for its broad portfolio of products and services, both domestically as well as internationally.

Zacks Rank & Key Picks

Lockheed Martin currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the same space are Huntington Ingalls (NYSE:HII) and Curtiss-Wright Corporation (NYSE:CW) , each sporting a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntington Ingalls recorded an average positive earnings surprise of 3.85% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by $5.44 to $17.38 in the last 90 days.

Curtiss-Wright Corporation recorded an average positive earnings surprise of 15.06% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 60 cents to $5.79 in the last 90 days.

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