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Lockheed Martin Wins DoD Contracts

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Lockheed Martin Corporation (LMT - Free Report) , the prime U.S. defense contractor, received two small contracts worth approximately $48.9 million from the U.S. Department of Defense (DoD) on May 15, 2014. Lockheed’s unique capabilities and operational efficiency have time and again secured defense contracts from the DoD.

The larger of the two contracts, worth $38.5 million, was awarded to Lockheed Martin Mission Systems & Training (MST). Per the contract, the company will assist in non-recurring engineering tasks required for MH-60 integration and testing of Advanced Data Transfer System (ADTS), including mission system and common cockpit suite. These services will be performed with the help of the U.S. Navy, and governments of Australia and Denmark. 95% of the work will be performed in Owego, NY and the rest in Farmingdale, NY. The project is scheduled to complete in Feb 2017.

The second contract, worth approximately $10.3 million, was received by Lockheed Martin Missiles and Fire Control (MFC). Per this modification contract, the company will exercise option contract line numbers 3101 Lots 12 and 4 systems engineering joint air to surface standoff missile baseline and extend range program support. In addition, it will provide support to 9101 JASSM BL Lot 12 and JASSM-ER Lot 4 program tooling and test equipment. The work will be executed at Orlando, FL, and Troy, AL. The project is scheduled to complete by Mar 31, 2017.

Although the threat of sequestration still lurks over this defense major, negatively impacting the company’s first quarter 2014 sales, Lockheed Martin seems to be on a wining spree in recent times with both big and small contracts.

In Mar 2014, the company’s MST division received a $93 million contract. This called for the company to exercise options for the production of Aegis Ashore Missile Defense System (AAMDS) in Poland and to provide multi-year procurement funding for Aegis Weapon System (AWS.V) MK 7 equipment sets. The contract is expected to be completed by Sep 2021.  Revenues however were soft at both the MFC and MST segments in the first quarter of 2014, declining 6.1% and 11%, respectively.

The sequester that went into effect at the start of Mar 2013 will cut spending by a total of approximately $1.1 trillion over the 8-year period from 2013 to 2021. Yet, Lockheed Martin expects to perform well in 2014 thanks to technological innovations, big contracts, acquisitions and growing commercial demand. Lockheed Martin reaffirmed its top-line expectation for 2014 in the range of $44,000 million to $45,500 million.

Currently, Lockheed Martin holds a Zacks Rank #3 (Hold). Other well-ranked defense players include The Boeing Co. (BA - Free Report) , Embraer SA (ERJ - Free Report) and Alliant Techsystems Inc. . All of these stocks hold a Zacks Rank #2 (Buy).

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