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Lockheed Martin Wins $80M Deal for Gyrocam Sensor Systems

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Lockheed Martin Corp.’s (LMT - Free Report) Gyrocam Systems business unit recently clinched a contract involving the production and delivery of spare parts for the AN/VSQ-6B Vehicle Optics Sensor system (VOSS). Work related to the deal is scheduled to be over by Jul 3, 2023.

Valued at $80 million, the contract was awarded by the Defense Logistics Agency Land and Maritime, Aberdeen Proving Ground, Maryland. Lockheed Martin will utilize fiscal 2018 through 2023 Army working capital funds and other procurement (Army) funds to complete the task, at Florida.

Gyrocam Systems & VOSS

Lockheed Martin’s Gyrocam Systems offer gyro-stabilized electro-optical sensors and night vision enhancements that allow users to see through fog, haze and complete darkness. These sensors are cost-effective and can be easily tailored with interchangeable universal mounts for ground vehicles, airborne platforms, maritime vessels and perimeter security application. To date, more than 1,100 Gyrocam sensor systems have been installed in all branches of the U.S. military, law enforcement and NATO and coalition partners.

The VOSS is a remotely-controlled, gyro-stabilized, telescoping, high-resolution, zoom capable multi-sensor (daylight camera, night vision camera, thermal imaging camera) surveillance system that uses existing commercial camera technology. This system has been use in Operation Enduring Freedom (OEF) and Major Army Commands on various variants of the Mine Resistant Ambush Protected (MRAP) Vehicle fleet.

What’s Favoring Lockheed Martin?

Lockheed Martin, being one of the Pentagon’s prime contractors, enjoys a steady flow of contracts each year and 2018 has not been any exception either. Recently, the company secured a contract worth $288 million for providing sensor systems along with other technical services for the Apache helicopter. Last week, it won a $175 million deal to support the F-35 Lightning depot implementation plan. Considering such frequent order inflows along with the latest one, we expect the company to reflect solid performance in the coming quarterly results, keeping its usual trend.

Moreover, Lockheed Martin ended 2017 with backlog worth $99.9 billion, up 3.8% from the year-ago number. This upside reflects increased demand from domestic and international customers. Additionally, its leveraged presence in the Army, Air Force, Navy and IT programs guarantees a steady flow of follow-on orders not only from the U.S. government but also from a large number of foreign allies of the nation.

The recently approved fiscal 2019 defense budget, which provisions for a spending of $716 billion in the United States’ defense, is also an added positive. These developments reflect solid growth prospects for Lockheed Martin’s combat-proven program like the Gyrocam Systems, which in turn, should boost its profit margin.

Price Movement    

In a year’s time, Lockheed Martin’s stock has gained about 6% compared with the industry’s 28% rally. 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 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 space are Northrop Grumman (NOC - Free Report) , Textron (TXT - Free Report) and Wesco Aircraft Holdings (WAIR - Free Report) . While Northrop Grumman sports a Zacks Rank #1 (Strong Buy), Textron and Wesco Aircraft Holdings carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Northrop Grumman delivered an average positive earnings surprise of 13.87% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings moved up 6.24% to $16.50 in the last 90 days.

Textron came up with an average positive earnings surprise of 16.64% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings climbed 2.94% to $3.15 in the last 90 days.

Wesco Aircraft Holdings’ long-term growth rate is pegged at 12%. The Zacks Consensus Estimate for 2018 earnings moved north 10% to 77 cents in the last 90 days.

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