Lockheed (LMT) Wins Contract to Support CH-53K Helicopter
Lockheed Martin Corp.’s LMT business segment, Sikorsky, has recently secured a modification contract involving CH-53K helicopter. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.
Details of the Deal
Valued at $19.6 million, the contract is expected to be completed by August 2024. Per the terms of the agreement, Lockheed will offer non-recurring engineering support to aid qualify the re-designed Data Concentrator Unit and Blade Fold Distributor hardware on the CH-53K aircraft for the Navy.
A major portion of the work related to this contract will be executed in Torrance, CA.
Benefits of the Contract
Countries across the world have been reinforcing their military resources due to intense geopolitical tensions and amplified terrorist threats.
Among other combat arsenals and weaponries, military helicopters have been gaining importance owing to advancements and integration of new tactical and logistical features. This has provided ample opportunities for Lockheed Martin to win production and modification contracts for helicopters in the recent times. The latest contract win is a bright example of that.
Such contract wins are likely to drive revenues from the Rotary and Mission Systems business segment, which comprises the Sikorsky helicopters including CH-53K.
Prospects
The United States, which is the largest exporter of military weaponries worldwide, is also strengthening its military resources. This is quite evident from the fiscal 2023 budget proposal worth $773 billion put forward by the Biden administration for the Department of Defense, with $56.5 billion planned investments in combat aircraft. Impressively, the defense budget request reflects a 4.1% increase from the fiscal 2022 enacted amount.
Such solid budgetary provisions should benefit Lockheed, along with other defense manufacturers like Northrop Grumman NOC , Boeing BA and Textron TXT , that are also experts in military aircraft manufacturing.
Since its inception, Northrop Grumman has been a pioneer in the development of manned aircraft for combat. Northrop Grumman also has a tradition of providing technological leadership in all aspects of military aviation and aircraft, such as manned, unmanned, targeting, surveillance and aircraft self-protection systems. It also enables warfighters to accomplish missions under any conditions.
NOC stock boasts a long-term earnings growth rate of 3.5%. The Zacks Consensus Estimate for 2023 sales implies a 4.6% increase from the year-ago reported figure.
Boeing Defense, Space & Security segment’s primary products include fixed-wing military aircraft, F/A-18E/F Super Hornet, F-15 programs, P-8 programs, KC-46A Tanker and T-7A Red Hawk. This segment also produces rotorcraft and rotary-wing programs like CH-47 Chinook, AH-64 Apache and V-22 Osprey.
BA stock boasts a long-term earnings growth rate of 4%. The Zacks Consensus Estimate for 2023 sales implies a 22.1% increase from the year-ago reported figure.
Textron’s business unit, Textron Aviation Defense, designs, builds and supports versatile and globally known military aircraft, preferred for training and attack missions. Two of Textron’s renowned products include Beechcraft T-6C trainer and AT-6 Wolverine.
TXT stock boasts a long-term earnings growth rate of 11.2%. The Zacks Consensus Estimate for 2023 sales implies a 8.1% increase from the year-ago reported figure.
Price Movement
In the past year, shares of Lockheed have gained 5.4% against the industry’s 14.9% decline.
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Zacks Rank
Lockheed Martin currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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