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Lockheed Martin (LMT) Wins $945M Contract for PAC-3 Missiles
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Lockheed Martin Corp. (LMT - Free Report) recently secured a $945-million modification contract for exercising production option of fiscal 2018 Patriot Advanced Capability-3 (PAC-3) missiles. The deal includes delivery of 54 U.S. Missile Segment Enhancement (MSE) missiles, 24 Qatar MSE missiles, 130 Kingdom of Saudi Arabia Cost Reduction Initiative (CRI) missiles and other associated ground support equipment.
Details of the Deal
The contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL. Operations related to the contract will be carried out in Grand Prairie and Lufkin, TX; Camden, AZ; Chelmsford, MA; Ocala, FL; Huntsville, AL; and Huntington Beach, CA.
Lockheed Martin will utilize fiscal 2010, 2016, 2017 and 2018 other procurement (Army) funds to complete the task. Work related to the deal is scheduled to be completed by Jan 31, 2021.
A Brief Note on PAC-3 Missiles
The Patriot Advanced Capability-Three (PAC-3) missile system is a long range, air-defense and medium to high-altitude guided missile system. It is designed to counter tactical ballistic missiles, cruise missiles and advanced aircraft. The system’s radar set provides tactical functions of airspace surveillance, target detection, identification, classification, tracking, missile guidance and engagement support.
Per Lockheed Martin, the PAC-3 Missile Segment Enhancement (PAC-3 MSE) interceptor employs a two-pulse solid rocket motor that boosts altitude and range. The company projects strong demand for this advanced missile system, particularly in politically tense regions of the Middle East.
Our View
With rising geo-political tension around the globe, nations are strengthening arsenals and taking initiatives to upgrade their defense systems. Defense equipments, in particular missile systems, have been witnessing improved traction recently, courtesy of the ongoing conflict between North Korea and the United States. Considering the fact that Lockheed Martin is a renowned missile-maker and Pentagon’s largest defense contractor, the company has been winning major contracts, in recent times.
Evidently, in the third quarter, the State Department approved the sale of THAAD anti-missile defense system worth $15 billion, which will allow Saudi Arabia to purchase 44 Terminal High Altitude Area Defense (THAAD) launchers and 360 missiles, as well as fire control stations and radars. The contract is likely to bolster the company’s long-term growth.
In the third quarter, the company also won a contract worth $900 million for delivering LRSO cruise missiles, designed to infiltrate and survive integrated air defense systems and prosecute strategic targets.
These contract wins came on the back of increasing prospects in the missile market. In line with this, the rocket and missile market is projected to reach $70 billion during 2017-2022 at a CAGR of 4.7%, as per Markets and Markets research firm.
Such estimates for missile market may have made induced Lockheed Martin’s management to raise 2017 sales outlook for three business segments, including Missiles and Fire Control, by a collective $550 million. The raised view was supported by higher expected volumes. We believe, rising demand for missiles in the global space along with the procurement of major contracts, like the latest one, will enable the company to successfully achieve its enhanced sales targets, in the upcoming days.
Price Movement
Lockheed Martin’s shares have returned about 28% in a year compared with the broader industry’s rally of 44.2%. The underperformance might have been caused by intense competition that the company faces in the domestic and international markets.
Curtiss-Wright delivered an average positive earnings surprise of 11.78% in the past four quarters. The Zacks Consensus Estimate for current-quarter earnings rose 6 cents over the last 60 days.
Leidos Holdings pulled off an average positive earnings surprise of 14.81% in the past four quarters. The Zacks Consensus Estimate for current-year earnings has risen 15 cents in the past 60 days.
Huntington Ingalls delivered an average positive earnings surprise of 14.22% in the last four quarters. The Zacks Consensus Estimate for current-year earnings has risen 56 cents in the past 60 days.
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It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Lockheed Martin (LMT) Wins $945M Contract for PAC-3 Missiles
Lockheed Martin Corp. (LMT - Free Report) recently secured a $945-million modification contract for exercising production option of fiscal 2018 Patriot Advanced Capability-3 (PAC-3) missiles. The deal includes delivery of 54 U.S. Missile Segment Enhancement (MSE) missiles, 24 Qatar MSE missiles, 130 Kingdom of Saudi Arabia Cost Reduction Initiative (CRI) missiles and other associated ground support equipment.
Details of the Deal
The contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL. Operations related to the contract will be carried out in Grand Prairie and Lufkin, TX; Camden, AZ; Chelmsford, MA; Ocala, FL; Huntsville, AL; and Huntington Beach, CA.
Lockheed Martin will utilize fiscal 2010, 2016, 2017 and 2018 other procurement (Army) funds to complete the task. Work related to the deal is scheduled to be completed by Jan 31, 2021.
A Brief Note on PAC-3 Missiles
The Patriot Advanced Capability-Three (PAC-3) missile system is a long range, air-defense and medium to high-altitude guided missile system. It is designed to counter tactical ballistic missiles, cruise missiles and advanced aircraft. The system’s radar set provides tactical functions of airspace surveillance, target detection, identification, classification, tracking, missile guidance and engagement support.
Per Lockheed Martin, the PAC-3 Missile Segment Enhancement (PAC-3 MSE) interceptor employs a two-pulse solid rocket motor that boosts altitude and range. The company projects strong demand for this advanced missile system, particularly in politically tense regions of the Middle East.
Our View
With rising geo-political tension around the globe, nations are strengthening arsenals and taking initiatives to upgrade their defense systems. Defense equipments, in particular missile systems, have been witnessing improved traction recently, courtesy of the ongoing conflict between North Korea and the United States. Considering the fact that Lockheed Martin is a renowned missile-maker and Pentagon’s largest defense contractor, the company has been winning major contracts, in recent times.
Evidently, in the third quarter, the State Department approved the sale of THAAD anti-missile defense system worth $15 billion, which will allow Saudi Arabia to purchase 44 Terminal High Altitude Area Defense (THAAD) launchers and 360 missiles, as well as fire control stations and radars. The contract is likely to bolster the company’s long-term growth.
In the third quarter, the company also won a contract worth $900 million for delivering LRSO cruise missiles, designed to infiltrate and survive integrated air defense systems and prosecute strategic targets.
These contract wins came on the back of increasing prospects in the missile market. In line with this, the rocket and missile market is projected to reach $70 billion during 2017-2022 at a CAGR of 4.7%, as per Markets and Markets research firm.
Such estimates for missile market may have made induced Lockheed Martin’s management to raise 2017 sales outlook for three business segments, including Missiles and Fire Control, by a collective $550 million. The raised view was supported by higher expected volumes. We believe, rising demand for missiles in the global space along with the procurement of major contracts, like the latest one, will enable the company to successfully achieve its enhanced sales targets, in the upcoming days.
Price Movement
Lockheed Martin’s shares have returned about 28% in a year compared with the broader industry’s rally of 44.2%. The underperformance might have been caused by intense competition that the company faces in the domestic and international markets.
Zacks Rank & Key Picks
Lockheed Martin carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the Aerospace sector are Curtiss-Wright Corporation (CW - Free Report) , Leidos Holdings, Inc. (LDOS - Free Report) and Huntington Ingalls Industries, Inc. (HII - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Curtiss-Wright delivered an average positive earnings surprise of 11.78% in the past four quarters. The Zacks Consensus Estimate for current-quarter earnings rose 6 cents over the last 60 days.
Leidos Holdings pulled off an average positive earnings surprise of 14.81% in the past four quarters. The Zacks Consensus Estimate for current-year earnings has risen 15 cents in the past 60 days.
Huntington Ingalls delivered an average positive earnings surprise of 14.22% in the last four quarters. The Zacks Consensus Estimate for current-year earnings has risen 56 cents in the past 60 days.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>