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Lockheed Martin (LMT) Arm Wins $31.2M Modification Contract

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Lockheed Martin Corporation’s (LMT - Free Report) business unit, Sikorsky, recently clinched a modification contract involving the supporting activities for CH-53K production aircraft. The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD.

Details of the Deal

Valued at $31.2 million, the contract is anticipated to conclude by March 2025. The latest modification deal includes the contract to provide non-recurring engineering, investigation, systems engineering support, risk analysis and integration development in support of the Data Transfer Unit. The deal also comprises Defensive Electronic Countermeasure System replacement within the CH-53K production aircraft.

Majority of the work related to the deal will be executed in Stratford, CT, Patuxent River, MD and Cedar Rapids, IA.

Importance of CH-53K Helicopter

The CH-53K helicopter includes Sikorsky’s 50 years of manufacturing and operational triumph with its CH-53A, CH-53D/G and CH-53E predecessors. The chopper specializes in heavy-lifting and moving the troops and equipment from ship to shore and higher altitude terrains more rapidly and effectively for the expeditionary U.S. Marine Corps and international militaries missions. It also supports handling missions like humanitarian aid, troop transport, casualty evacuation, support of special operations forces, and combat search and rescue (CSAR).

Looking Ahead

Countries globally have been reinforcing their military resources due to intense geo-political tensions and amplified terrorist threats. The United States, which is the largest exporter of military weaponries worldwide, is focused on strengthening its military resources. This is quite evident from the allotment of a $715 billion investment plan, in the U.S. fiscal 2022 defense budget,for U.S military arsenals and weaponries.

In this context, military helicopters have also been gaining importance owing to advancements and integration of new tactical, logistical features. This has provided ample opportunities for Lockheed Martin to win production as well as modification contract for helicopters in recent times. This, in turn, is likely to drive its revenues from the Rotary and Mission Systems (RMS) business segment, which comprises the Sikorsky helicopters.

The growing demand for proven combat system helicopters will continue to support Lockheed Martinwith solid flow of contracts from the Pentagon involving CH-53K helicopter. The latest deal is a testament to that.

It is imperative to mention in this context that the solid demand for military helicopters will not only benefit Lockheed Martin but also The Boeing Company (BA - Free Report) , Airbus SE (EADSY - Free Report) and Textron (TXT - Free Report) .

For instance, The Boeing MH-47G belongs to the family of CH-47 Chinook multi-role heavy lift helicopters. The helicopter enjoys a massive global demand owing to its advanced and combat proven features that enable it to work in all kinds of combat and tactical missions.

During the third quarter, Boeing delivered four CH-47F Block II Chinook helicopters for the U.S Army.

Airbus is among the world's largest suppliers of advanced military helicopters. EADSY’S helicopters are in service across more than 150 countries worldwide. Airbus’s product line offers the full spectrum of rotary-wing aircraft solutions for civil, government, military, law enforcement and Para public uses. Some of the significant helicopters manufactured by Airbus are H125M, H135M and H145M.

Airbus’ Zacks Consensus Estimate for 2021 increased 4.2% in the last one 60 daysShares of Airbushave appreciated 8.3% in the last one year.

Textron’s Bell unit is a renowned manufacturer of military helicopters like AH-1Z, UH-1Y, V-22 among others.

Textron’s Zacks Consensus Estimate for 2021 earnings has been revised upward by 1.5% to $3.33 in the last 60 days. The long-term earnings growth rate for Textron is pegged at 28.25%. TXT, which has been returning value to investors regularly, has gained 61.2% in the past one year.

Price Movement

In the past one month, shares of Lockheed have gained 3.6% against the industry’s decline of 3.1%.

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Zacks Rank

Lockheed Martin currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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