Lockheed Martin Corp. (LMT - Free Report) recently clinched a $176.4-million contract to support AEGIS SPY-1 Weapon System. Per the terms, the company will repair 1,672 different parts of the weapon system.
Work related to the deal will be executed in Moorestown, NJ, and is scheduled to be completed by August 2024. The contract was awarded by the Naval Supply Systems Command, Weapon Systems Support, Philadelphia, PA.
A Brief Note on Aegis Combat System
AEGIS or Advanced Electronic Guidance and Instrumentation System is an integrated missile guidance system, which is used by the U.S. Navy and allied ships to protect the battle group. It is the world’s most advanced combat system and the only maritime ballistic defense system, which is capable of simultaneously attacking land targets, submarines, and surface ships while protecting the fleet against aircraft, cruise missiles and other ballistic missiles. At the heart of the system lies the AN/SPY-1, an advanced, automatic detect and track, multi-function, phased-array radar.
What Favors Lockheed Martin
Heightened geopolitical tensions and surge in terrorist activities across the globe have compelled nations, of late, to strengthen their military arsenals, with missile systems being an integral part of it. The United States, being the largest exporter of military weaponry worldwide, leads the race in this regard. The latest $1.7-billion investment plan to purchase 37 Aegis Ballistic Missile Defense systems in the proposed U.S. fiscal 2020 defense budget only highlights this fact further.
Additionally, per ASD Media BV, the global Missiles and Missile Defense Systems (MMDS) market value is projected to see a CAGR of 6% to $93 billion by 2027 from 2018. Such growth can be attributed to heavy and frequent investments made by developing nations like the United States, China, Russia and Israel in the development of next-generation missiles and missile defense systems.
Notably, these aforementioned developments and technological advancements will further lead to the increasing demand for missiles, spare parts and technical services. This, in turn, should boost growth prospects of prominent missile market players like Lockheed Martin.
Shares of Lockheed Martin have gained 20.2% in the past twelve months compared with the industry’s growth of 7.2%.
Zacks Rank & Other Key Picks
Lockheed Martin currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the same sector are Aerojet Rocketdyne Holdings (AJRD - Free Report) , Heico Corporation (HEI - Free Report) and Northrop Grumman Corporation (NOC - Free Report) .
While Aerojet Rocketdyne and Heico Corporation sport a Zacks Rank #1 (Strong Buy), Northrop Grumman 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 25.46% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 13.8% to $1.90 in the past 90 days.
Heico Corporation pulled off average positive earnings surprise of 9.47% for the trailing four quarters. The Zacks Consensus Estimate for 2019 earnings has moved 4.7% north to $2.24 in the past 90 days.
Northrop Grumman delivered average positive earnings surprise of 20.11% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has moved up 1.55% to $19.59 in the past 90 days.
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