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Lockheed Martin (LMT) Secures $1.5B Army Deal for PAC-3
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Lockheed Martin Corp.'s (LMT - Free Report) business unit, Missiles and Fire Control, has won a foreign military sales ("FMS") contract from the U.S. Army for fiscal 2017 Patriot Advanced Capability-3 (PAC-3) and PAC-3 Missile Segment Enhancement (PAC-3 MSE) interceptors production and delivery.
Contract Details
The contract is valued at $1.5 billion. It was awarded by the Army Contracting Command, Redstone Arsenal, AL.
The contract covers 205 missile segment enhancements of U.S. and Qatar missiles, and 58 cost reduction initiatives for U.S. and Republic of Korea missiles. Lockheed Martin will also provide spare parts for the U.S., Qatar, Republic of Korea, Taiwan, United Arab Emirates and Saudi Arabia, along with associated ground support equipment.
Work is scheduled to be complete by Jun 30, 2020. It will be executed in various locations. The contract will use fiscal 2015, 2016 and 2017 other procurement (Army), and other funds.
A Brief Note on PAC-3
PAC-3 is the most advanced, capable and powerful terminal air defense missile that can defend against tactical ballistic missiles, cruise missiles and aircraft. It is a high-velocity interceptor that counters incoming targets by direct body-to-body impact. The PAC-3 missile uses a solid propellant rocket motor, aerodynamic controls, attitude control motors and inertial guidance to navigate.
According to Lockheed Martin, the PAC-3 MSE missile employs a two-pulse solid rocket motor that boosts altitude and range to meet growing threats.
These missiles are currently used by six nations — the U.S., Germany, Japan, Netherlands, United Arab Emirates and Taiwan. Apart from the countries listed under the latest contract, Lockheed Martin has a contract with Kuwait for these missiles.
What's Favoring Lockheed?
Lockheed Martin manufactures combat-proven PAC-3 missiles under production contracts from the U.S. Army, Air and Missile Defense Program. This enables the company to enjoy a steady stream of contracts.
It is the largest U.S. defense contractor with a platform-centric focus that guarantees a regular inflow of follow-on orders from a leveraged presence in the U.S. Army, Air Force, Navy and IT programs.
Meanwhile, the company plans to increase its international mix from 21% in 2016 to 25% of total sales in the upcoming years. The projection was recently raised to 30% for the next few years. Lockheed Martin continues to witness robust demand in the international market for its programs. In particular, the Asia-Pacific and Middle Eastern countries comprise its biggest market for Missile Defense.
The latest contract is expected to boost the company's international business substantially and may even attract more of such contracts in the future, given that PAC-3 is one of the top priorities in the Pentagon's missile system.
Price Movement
Lockheed Martin's stock has improved about 15.9% in the last one year, outperforming the Zacks categorized Aerospace/Defense industry's gain of 11.1%. This could be because the company continues to witness a steady flow of contracts from the Pentagon and other international customers.
Zacks Rank & Key Picks
Lockheed Martin currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in this space include Engility Holdings, Inc. , Northrop Grumman Corporation (NOC - Free Report) and Leidos Holdings, Inc. (LDOS - Free Report) .
On an average, Engility has delivered a positive earnings surprise of 23.19% in the trailing four quarters. The company's 2016 earnings estimates increased 13.4% over the last 60 days. Engility sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Northrop Grumman, another Zacks Rank #1 stock, delivered a positive earnings surprise of 8.29% in the trailing four quarters. The company's 2016 earnings estimates increased 6% in the last 60 days.
Leidos Holdings carries a Zacks Rank #2 (Buy). The company's 2016 earnings estimates increased 10.3% over the last 60 days. On an average, the company has delivered a positive earnings surprise of 12.20% in the trailing four quarters.
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Lockheed Martin (LMT) Secures $1.5B Army Deal for PAC-3
Lockheed Martin Corp.'s (LMT - Free Report) business unit, Missiles and Fire Control, has won a foreign military sales ("FMS") contract from the U.S. Army for fiscal 2017 Patriot Advanced Capability-3 (PAC-3) and PAC-3 Missile Segment Enhancement (PAC-3 MSE) interceptors production and delivery.
Contract Details
The contract is valued at $1.5 billion. It was awarded by the Army Contracting Command, Redstone Arsenal, AL.
The contract covers 205 missile segment enhancements of U.S. and Qatar missiles, and 58 cost reduction initiatives for U.S. and Republic of Korea missiles. Lockheed Martin will also provide spare parts for the U.S., Qatar, Republic of Korea, Taiwan, United Arab Emirates and Saudi Arabia, along with associated ground support equipment.
Work is scheduled to be complete by Jun 30, 2020. It will be executed in various locations. The contract will use fiscal 2015, 2016 and 2017 other procurement (Army), and other funds.
A Brief Note on PAC-3
PAC-3 is the most advanced, capable and powerful terminal air defense missile that can defend against tactical ballistic missiles, cruise missiles and aircraft. It is a high-velocity interceptor that counters incoming targets by direct body-to-body impact. The PAC-3 missile uses a solid propellant rocket motor, aerodynamic controls, attitude control motors and inertial guidance to navigate.
According to Lockheed Martin, the PAC-3 MSE missile employs a two-pulse solid rocket motor that boosts altitude and range to meet growing threats.
These missiles are currently used by six nations — the U.S., Germany, Japan, Netherlands, United Arab Emirates and Taiwan. Apart from the countries listed under the latest contract, Lockheed Martin has a contract with Kuwait for these missiles.
What's Favoring Lockheed?
Lockheed Martin manufactures combat-proven PAC-3 missiles under production contracts from the U.S. Army, Air and Missile Defense Program. This enables the company to enjoy a steady stream of contracts.
It is the largest U.S. defense contractor with a platform-centric focus that guarantees a regular inflow of follow-on orders from a leveraged presence in the U.S. Army, Air Force, Navy and IT programs.
Meanwhile, the company plans to increase its international mix from 21% in 2016 to 25% of total sales in the upcoming years. The projection was recently raised to 30% for the next few years. Lockheed Martin continues to witness robust demand in the international market for its programs. In particular, the Asia-Pacific and Middle Eastern countries comprise its biggest market for Missile Defense.
The latest contract is expected to boost the company's international business substantially and may even attract more of such contracts in the future, given that PAC-3 is one of the top priorities in the Pentagon's missile system.
Price Movement
Lockheed Martin's stock has improved about 15.9% in the last one year, outperforming the Zacks categorized Aerospace/Defense industry's gain of 11.1%. This could be because the company continues to witness a steady flow of contracts from the Pentagon and other international customers.
Zacks Rank & Key Picks
Lockheed Martin currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in this space include Engility Holdings, Inc. , Northrop Grumman Corporation (NOC - Free Report) and Leidos Holdings, Inc. (LDOS - Free Report) .
On an average, Engility has delivered a positive earnings surprise of 23.19% in the trailing four quarters. The company's 2016 earnings estimates increased 13.4% over the last 60 days. Engility sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Northrop Grumman, another Zacks Rank #1 stock, delivered a positive earnings surprise of 8.29% in the trailing four quarters. The company's 2016 earnings estimates increased 6% in the last 60 days.
Leidos Holdings carries a Zacks Rank #2 (Buy). The company's 2016 earnings estimates increased 10.3% over the last 60 days. On an average, the company has delivered a positive earnings surprise of 12.20% in the trailing four quarters.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today's most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>