Lockheed in Littoral Combat Deal

Lockheed Martin Corporation (LMT - Analyst Report) was provided funding in the amount of $696,629,123 for construction of two Littoral Combat Ships. The Naval Sea Systems Command, Washington, D.C., is the contracting authority.

A littoral combat ship is a type of relatively small surface vessel intended for operations in the littoral zone. They are well designed to tackle rapidly changing global threats and provide a cost-effective solution in the current era of tight budgets.

Work on the contract will mainly be performed in Marinette, Wisconsin (56%); Walpole, Massachusetts (14%); Washington, D.C. (12%); Oldsmar, Florida (4%); Beloit, Wisconsin (3%); Moorestown, New Jersey (2%); and Minneapolis, Minnesota (2%). The company expects to finish work on the contract by Jul 2018.

Lockheed Martin is the largest U.S. defense contractor with a platform-centric focus and a steady inflow of follow-on orders due to its leveraged presence in the Army, Air Force, Navy and IT programs. However, the ongoing trend of governmental delays in program decisions and even program cancellations have affected the fortunes of the defense industry in general and Lockheed Martin in particular.

Lockheed Martin finished 2012 with $82.3 billion of order backlog, including $19.8 billion of new orders booked in the fourth quarter. Of this $30.1 billion belonged to the Aeronautics segment and $18.1 billion to the Space Systems segment. The rest is made up of $14.7 billion for the Missiles and Fire Control segment; $10.7 billion for Mission Systems and Training; and $8.7 billion for the Information Systems & Global Solutions.

Lockheed Martin is a Zacks Rank #2 (Buy) stock. The past 60 days have seen 12 of the 13 earnings estimates for full year 2013 moving up despite an industry-wide threat of budget cutbacks and effects of sequestration.

In the aerospace and defense industry we presently prefer the Zacks Rank #1 (Strong Buy) stock, European Aeronautic Defence and Space Company (EADSY). Other than Lockheed Martin, Zacks Rank #2 (Buy) stocks in the defense space include The Boeing Company (BA - Analyst Report) and FLIR Systems, Inc. (FLIR - Analyst Report).