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Lockheed Martin Wins $462M Deal Related to GPS Sustainment

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Lockheed Martin Corp. (LMT - Free Report) recently won a $462-million contract for offering sustainment support to the control segment of Global Positioning Systems II. The contract was awarded by the Space and Missile Systems Center, Peterson Air Force Base, CO.

Details of the Deal

Per the deal, Lockheed Martin will provide depot-level software maintenance, integration of GPS Acquisition Category III programs onto the operational control system platform, systems engineering and technical order management agency support. The company will also offer maintenance and sustainment of the consolidated test environment and non-recurring engineering and studies.

Work related to the deal will be performed in Colorado Springs, CO and is expected to get completed by Dec 31, 2025.

What Favors Lockheed Martin?

Due to rising global geo-political tensions in recent times, strengthening a nation’s satellite communication by incorporating advanced technology has become an essential requirement.  In modern age, military intelligence, navigation & positioning, and digital video Broadcasting (DVB) are the few demanding applications of satellite communication. These satellites significantly help strengthen a nation’s military prowess. As a result, with rapidly rising demand for new-age satellite communication, satellite developers like Lockheed Martin have increased their focus in innovating even more advanced military satellites and associated equipment.

To this end, it is imperative to mention that Lockheed Martin has recently launched GPS III satellites, the most powerful GPS satellite ever built for the U.S. Air Force. These satellites have three times better accuracy and up to eight times improved anti-jamming capabilities. Spacecraft life will extend to 15 years, 25% longer than the newest GPS satellites on-orbit today. Surely, these developments will usher in more contracts, like the latest one, for this defense major in coming days, thereby boosting its profit margin.

Per Markets Research Future, the Global Military Satellite market is projected to see a CAGR of more than 6% during 2018-2023. Thus, we may expect the aforementioned developments to play in favor of Lockheed Martin and enable the company to capture more shares in the expanding Military Satellite market, going ahead.

Price Movement

Lockheed Martin’s stock has declined 21.2 in the past year compared with the industry’s fall of 14.6%. The underperformance may have been caused by the intense competition the company faces in the aerospace-defense space for its broad portfolio of products and services, both domestically and internationally.

Zacks Rank & Other Stocks to Consider

Lockheed Martin currently carries a Zacks Rank #2 (Buy).

A few top-ranked companies in the same sector are Aerojet Rocketdyne Holdings (AJRD - Free Report) , Teledyne Technologies Incorporated (TDY - Free Report) and The Boeing Company (BA - Free Report) .

While Aerojet Rocketdyne and Teledyne Technologies sport a Zacks Rank #1 (Strong Buy), Boeing carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet Rocketdyne came up with average positive earnings surprise of 19.27% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 43.3% to $1.82 in the past 90 days.

Teledyne Technologies came up with average positive earnings surprise of 12.92% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 6% to $8.75 in the past 90 days.

Boeing delivered average positive earnings surprise of 28.01% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 3% to $15.05 in the past 90 days.

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