Lockheed Martin's Unit Wins $109M ECASS Deal From US Navy

Lockheed Martin Corp.’s (NYSE:LMT) business unit Rotary and Mission Systems (RMS) has secured a contract from the U.S. Navy for modification of a previously awarded firm-fixed-price, cost-plus-fixed-fee, cost-reimbursable contract.

The company will provide 41 electronic Consolidated Automated Support Systems (eCASS). As per the terms, Lockheed Martin will provide for eCASS-related equipment, kits and test sets in support of various Aircraft Intermediate Maintenance Departments, Fleet Readiness Centers, Aircraft Carriers and L- Class Ships.

Valued at $109 million, this contract was awarded by the Naval Air Warfare Center Aircraft Division, Lakehurst, NJ. The company plans to utilize fiscal 2019 aircraft procurement (Navy), and 2018 shipbuilding and conversion (Navy) funds to complete work under this deal by December 2021.

More on eCASS

Per Lockheed Martin’s management, eCASS is the workhorse for avionics repair across the Naval Aviation Enterprise. It has been designed to help sailors and marines troubleshoot and repair aircraft assemblies at sea or ashore, and return the avionics to operational service without much delay. Based on Lockheed Martin’s LM-STAR commercial automated testing system, eCASS facilitates technology insertion and long-term supportability, while maximizing interoperability and portability in external systems.

What’s Working in Favor of Lockheed Martin?

In recent times, military helicopters have gained significant traction in the U.S. aerospace-defense market on advancements and integration of new tactical, logistical and other important features. Some of these developments have been pioneered by Lockheed Martin, paving the way for a slew of key helicopter-related contracts.

During third-quarter 2018, revenues at Lockheed Martin’s RMS business increased 14.4% year over year, partially driven by higher volume of sales for its Sikorsky helicopter programs. We can therefore expect Lockheed Martin’s RMS unit to generate similar top-line growth in the days ahead based on a consistent flow of order from Pentagon.

Price Movement

Lockheed Martin’s stock has declined 18.5% in the past 12 months compared with the industry’s fall of 8.2%. The underperformance may have been caused by the intense competition the company faces in the aerospace-defense space for its broad portfolio of products and services, both domestically as well as internationally.

Zacks Rank & Other Key Picks

Lockheed Martin currently carries a Zacks Rank #2 (Buy). A few other top-ranked stocks in the same sector are Esterline Technologies Corporation (NYSE:ESL) , American Outdoor Brands Corporation (NASDAQ:AOBC) and Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Esterline Technologies carries a Zacks Rank #1. It delivered average positive surprise of 22.93% in the last four reported quarters. The Zacks Consensus Estimate for fiscal 2019 earnings has moved 1.7% north to $4.81 in the past 30 days.

American Outdoor Brands carries a Zacks Rank #2. It delivered average positive surprise of 64.88% in the last four reported quarters. The Zacks Consensus Estimate for fiscal 2019 earnings has risen 9% to 73 cents in the past 30 days.

Kratos Defense & Security Solutions carries a Zacks Rank #2. It delivered average positive surprise of 98.41% in the last four reported quarters. The Zacks Consensus Estimate for 2018 earnings has moved 5% up to 21 cents in the past 30 days.

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