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Lockheed Martin Wins $84M Deal to Design Missile Technologies

Zacks Equity Research

Lockheed Martin Corp .’s NOC business unit, Missile and Fire Control, recently secured an $84.1-million contract to develop technologies for the Joint Air-to-Surface Standoff Missile, Long Range Anti-Ship Missile, Joint Air-to-Ground Missile and Hellfire baseline weapon systems. Majority of the work related to the deal will be performed in Orlando, FL.

Details of the Deal

Per the agreement, the company’s Missile and Fire Control unit will provide design and development studies, technology demonstrations and technical engineering services for developing its various missile systems. The entire work is expected to be completed by March 2024. The contract was awarded by the Naval Air Warfare Center Weapons Division, China Lake, CA.

What Favors Lockheed Martin?

In recent times, increasing geopolitical tensions across the globe has induced many nations to expand their military arsenal, with missiles constituting a significant part of that. The company, being one of the major missile makers in the United States, stands out among peers by virtue of its broadly-diversified programs and strong order bookings for different variants of missiles. This allows the company’s Missiles and Fire
Control unit to deliver positive top-line growth.

Evidently, in fourth-quarter 2018, revenues at the Missiles and Fire Control unit increased a solid 22% year over year, driven by increased volumes of tactical and strike missiles programs, and integrated air and missile defense programs, due to solid contract inflows. Given its proven expertise and increasing demand for its various missile programs, we may expect a consistent order flow for Lockheed Martin from the Pentagon, like the latest one. This, in turn, will enable the company’s missile business unit to continue to generate similar top-line growth in coming days.

Looking Ahead

Per Markets and Markets research firm, the global rocket and missile market is projected to rise from $55.5 billion in 2017 to $70 billion by 2022, at a CAGR of 4.74%. Given this huge opportunity for expansion, the need for developing complexed technologies for different variants of missiles will also grow. Such projections will certainly benefit U.S. defense giant and top missile maker, Lockheed Martin in the future.

Price Performance

Shares of Lockheed Martin has dropped about 8.9% in a year compared with the industry’s decline of 2.9%.

Zacks Rank & Key Picks

Lockheed Martin currently carries Zacks Rank #3 (Hold). A few better-ranked stocks in the same sector are The Boeing Company BA, Spirit Aerosystems Holdings SPR and Heico Corporation HEI.

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

Boeing came up with average positive earnings surprise of 17.08% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 11.3% to $20.13 in the past 90 days.

Spirit Aerosystems’ long-term growth estimates currently stand at 7.80%. The Zacks Consensus Estimate for 2019 earnings has risen 3.7% to $7.56 in the past 90 days.

Heico Corporation’s long-term growth estimates currently stand at 12.10%. The Zacks Consensus Estimate for 2019 earnings has risen 7% to $2.14 in the past 90 days.

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