Back to top

Image: Bigstock

Lockheed Martin (LMT) Wins $522M Deal for Trident II Missile

Read MoreHide Full Article

Lockheed Martin Corp.’s (LMT - Free Report) Space Systems business segment recently secured a modification contract to exerc ise options for Trident II (D5) missile production and for providing associated system support for deployment. Work related to this deal is scheduled to be over by Sep 30, 2022.

Details of the Deal

Valued at $522.3 million, the contract has been awarded by the Strategic Systems Programs, Washington, DC.

Majority of the work for this agreement will be executed in Magna, Utah and Sunnyvale, CA. The remaining part will be carried out in Cape Canaveral, FL; Pittsfield, MA and in various other regions across the United States.

Lockheed Martin will utilize fiscal 2018 weapons procurement (Navy), fiscal 2018 other procurement (Navy) funds, and fiscal 2018 research, development, test, and evaluation (Navy) funds to complete the task. Fiscal 2018 research, development, test, and evaluation (Navy) funds might also be utilized to partially finance the deal, subject to availability.

A Brief Note on Trident II (D5)

Trident II (D5) is the latest generation of submarine-launched fleet ballistic missiles, developed and produced by Lockheed Martin. It was first deployed in 1990 and is currently aboard the OHIO-class and BritishVANGUARD-class submarines.

Markedly, these missiles are equipped with multiple independently targetable re-entry vehicles (MIRV) and thermonuclear warheads.

What’s Favoring Lockheed Martin?

Lockheed Martin’s Space Systems unit is the prime contractor of the Navy's Trident missile. Notably, the Trident II D5 Fleet Ballistic Missile is a program with the U.S. Navy for the only submarine-launched intercontinental ballistic missile currently in production in the United States.

Along with the United States and other powerful nations, developing countries across the globe are also revamping their missile strength due to the increasing geopolitical conflicts, war, and terrorism. As a result of this, the global rocket and missile market, which also includes fleet ballistic missiles, is projected to grow at a CAGR of 4.74% during 2017-2022 to reach a value of $70 billion by 2022 (as per Markets and Markets research firm). Such projects reflect improved growth opportunities for missile-makers like Lockheed Martin, in the years to come.

In February 2018, the $716-billion proposal made by President Trump for the fiscal 2019 defense policy bill is surely anticipated to boost the overall defense industry. In particular, this budget provisions for an investment of approximately $6 billion in the United States’ missile defense program. We believe the latest contract won by Lockheed Martin is a reflection of the fact that the United States is rapidly expanding its missile strength and given the budget’s allocation for missile programs, the company will win more such deals in the days ahead.

Price Movement    

Lockheed Martin’s stock has returned about 23.3% over a year, compared with the broader industry’s gain of 43.8%. 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 sector are Boeing (BA - Free Report) , Huntington Ingalls (HII - Free Report) and Rockwell Collins . While Boeing and Huntington Ingalls sport a Zacks Rank #1 (Strong Buy), Rockwell Collins carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Boeing delivered an average positive earnings surprise of 20.69% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by $3.06 to $14.05 in the last 90 days.

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

Rockwell Collins recorded an average positive earnings surprise of 2.50% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved north by 7 cents to $7.23 in the last 90 days.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Published in