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Lockheed (LMT) Wins $200M Deal to Support the U.S. Navy
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Lockheed Martin Corp.’s (LMT - Free Report) business segment, Rotary and Mission Systems (“RMS”), recently clinched a modification contract for providing engineering design, development and production support to the U.S. Navy. The award has been offered by the Naval Sea Systems Command, Washington, D.C.
Valued at $199.6 million, the contract is projected to be completed by September 2025. A major portion of the work related to this deal will be carried out in Manassas, VA.
Lockheed’s Maritime Solutions
Nations across the globe are fortifying their defense spending on military weapons and arsenals as they look to strengthen their defense capabilities. Against this backdrop, as countries worldwide are enhancing their sea warfare capabilities, an augmented investment in manufacturing navy combat vehicles as well as constantly upgrading them is being noticed in recent times.
To this end, it is imperative to mention that Lockheed remains one of the primary suppliers of maritime solutions, training and sustainment for the U.S. Navy.
In particular, its Aegis is a world-renowned naval combat system, which operates as a total weapon system, from detection to kill. The fact that the Aegis weapons system is currently deployed on more than 100 ships across eight ship classes and six navies indicates the solid demand that it enjoys in the global naval combat systems market.
Aegis apart, other notable programs designed by LMT’s RMS unit that support the naval missions of the U.S. Navy and international customers are the Littoral Combat Ship (“LCS”) and the Multi-Mission Surface Combatant. This unit also has the Command, Control, Battle Management and Communications (C2BMC) program, which offers undersea combat systems programs to the U.S. Navy.
Such capabilities of Lockheed to serve the U.S. Navy with precision sea-based weapons must have enabled it to secure solid order inflows like the latest one.
Growth Prospects
As navies around the world are trying to strengthen their defense systems to meet national security goals, the growth prospects for the naval combat system market remain solid. In this regard, according to a report by the Mordor Intelligence firm, the global naval combat system market is projected to witness a CAGR of 2.5% during the 2024-2029 period.
This is likely to benefit Lockheed, considering its maritime capabilities that enable current and future maritime missions. Notably, to ensure the U.S. Navy’s dominance in the sea, LMT provides a broad portfolio of capabilities, including ships, aircraft, manned and unmanned systems, projectiles and sensors.
Outside the United States, Lockheed’s maritime solutions also aim at strengthening the sea warfare capabilities of U.S. allies as well as other international customers, thereby enhancing its global reach in the naval combat systems space. Evidently, Lockheed offers its SEA 4000 Air Warfare Destroyer (“AWD”) program to upgrade Australia's maritime defense capability. Under this program, the HOBART Class AWDs have been the most advanced and complex warships ever built in Australia.
LMT apart, other defense contractors that are likely to gain from the solid growth opportunities offered by the global naval combat systems market are mentioned below:
Huntington Ingalls Industries, Inc. (HII - Free Report) : Its Ingalls Shipbuilding and Newport News Shipbuilding segments design and construct non-nuclear ships, including amphibious assault ships, expeditionary warfare ships, surface combatants and national security cutters. During 2023, 81% of the company’s revenues were generated from the U.S. Navy.
HII boasts a long-term (three-to-five-years) earnings growth rate of 7.2%. The Zacks Consensus Estimate for 2024 sales implies growth of 2% from the prior-year figure.
Northrop Grumman Corp. (NOC - Free Report) : It delivers components like Airborne LASER Mine Detection System, Surface Electronic Warfare Improvement Program Block III, Fire Scout and bridge and navigation systems for both the Freedom and Independence variants of LCS. During 2023, 15% of NOC’s sales belonged to the Navy.
NOC boasts a long-term earnings growth rate of 8.7%. The Zacks Consensus Estimate for 2024 sales implies growth of 4.6% from the prior-year figure.
General Dynamics Corp. (GD - Free Report) : It is the lead integrator for the Independence-variant LCS. GD is responsible for the design, integration and testing of the navigation, command, control, computing and aviation systems on each ship. In 2023, the Marins Systems business segment generated 23% of the company’s total revenues.
GD boasts a long-term earnings growth rate of 12%. The Zacks Consensus Estimate for 2024 sales implies growth of 10.5% from the prior-year reported figure.
Price Performance
In the past year, shares of LMT have rallied 3.1% against the industry’s 10.2% decline.
Image: Bigstock
Lockheed (LMT) Wins $200M Deal to Support the U.S. Navy
Lockheed Martin Corp.’s (LMT - Free Report) business segment, Rotary and Mission Systems (“RMS”), recently clinched a modification contract for providing engineering design, development and production support to the U.S. Navy. The award has been offered by the Naval Sea Systems Command, Washington, D.C.
Valued at $199.6 million, the contract is projected to be completed by September 2025. A major portion of the work related to this deal will be carried out in Manassas, VA.
Lockheed’s Maritime Solutions
Nations across the globe are fortifying their defense spending on military weapons and arsenals as they look to strengthen their defense capabilities. Against this backdrop, as countries worldwide are enhancing their sea warfare capabilities, an augmented investment in manufacturing navy combat vehicles as well as constantly upgrading them is being noticed in recent times.
To this end, it is imperative to mention that Lockheed remains one of the primary suppliers of maritime solutions, training and sustainment for the U.S. Navy.
In particular, its Aegis is a world-renowned naval combat system, which operates as a total weapon system, from detection to kill. The fact that the Aegis weapons system is currently deployed on more than 100 ships across eight ship classes and six navies indicates the solid demand that it enjoys in the global naval combat systems market.
Aegis apart, other notable programs designed by LMT’s RMS unit that support the naval missions of the U.S. Navy and international customers are the Littoral Combat Ship (“LCS”) and the Multi-Mission Surface Combatant. This unit also has the Command, Control, Battle Management and Communications (C2BMC) program, which offers undersea combat systems programs to the U.S. Navy.
Such capabilities of Lockheed to serve the U.S. Navy with precision sea-based weapons must have enabled it to secure solid order inflows like the latest one.
Growth Prospects
As navies around the world are trying to strengthen their defense systems to meet national security goals, the growth prospects for the naval combat system market remain solid. In this regard, according to a report by the Mordor Intelligence firm, the global naval combat system market is projected to witness a CAGR of 2.5% during the 2024-2029 period.
This is likely to benefit Lockheed, considering its maritime capabilities that enable current and future maritime missions. Notably, to ensure the U.S. Navy’s dominance in the sea, LMT provides a broad portfolio of capabilities, including ships, aircraft, manned and unmanned systems, projectiles and sensors.
Outside the United States, Lockheed’s maritime solutions also aim at strengthening the sea warfare capabilities of U.S. allies as well as other international customers, thereby enhancing its global reach in the naval combat systems space. Evidently, Lockheed offers its SEA 4000 Air Warfare Destroyer (“AWD”) program to upgrade Australia's maritime defense capability. Under this program, the HOBART Class AWDs have been the most advanced and complex warships ever built in Australia.
LMT apart, other defense contractors that are likely to gain from the solid growth opportunities offered by the global naval combat systems market are mentioned below:
Huntington Ingalls Industries, Inc. (HII - Free Report) : Its Ingalls Shipbuilding and Newport News Shipbuilding segments design and construct non-nuclear ships, including amphibious assault ships, expeditionary warfare ships, surface combatants and national security cutters. During 2023, 81% of the company’s revenues were generated from the U.S. Navy.
HII boasts a long-term (three-to-five-years) earnings growth rate of 7.2%. The Zacks Consensus Estimate for 2024 sales implies growth of 2% from the prior-year figure.
Northrop Grumman Corp. (NOC - Free Report) : It delivers components like Airborne LASER Mine Detection System, Surface Electronic Warfare Improvement Program Block III, Fire Scout and bridge and navigation systems for both the Freedom and Independence variants of LCS. During 2023, 15% of NOC’s sales belonged to the Navy.
NOC boasts a long-term earnings growth rate of 8.7%. The Zacks Consensus Estimate for 2024 sales implies growth of 4.6% from the prior-year figure.
General Dynamics Corp. (GD - Free Report) : It is the lead integrator for the Independence-variant LCS. GD is responsible for the design, integration and testing of the navigation, command, control, computing and aviation systems on each ship. In 2023, the Marins Systems business segment generated 23% of the company’s total revenues.
GD boasts a long-term earnings growth rate of 12%. The Zacks Consensus Estimate for 2024 sales implies growth of 10.5% from the prior-year reported figure.
Price Performance
In the past year, shares of LMT have rallied 3.1% against the industry’s 10.2% decline.
Image Source: Zacks Investment Research
Zacks Rank
Lockheed currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.