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Lockheed (LMT) Wins Contract to Support CH-53K Aircraft

Lockheed Martin Corp.’s LMT business unit, Sikorsky, recently clinched a modification contract involving the CH-53K helicopter. The award has been provided by the Naval Air Systems Command, Patuxent River, MD.

Details of the Deal

Valued at $30.2 million, the contract is expected to get completed by December 2023. Per the terms of the deal, Lockheed will provide technical publications, logistics support analysis and logistics product data resulting from production engineering changes, diminishing manufacturing sources and material shortages to support CH-53K aircraft production and fielding.

The majority of work related to this deal will be carried out in Stratford, CT.

Benefits of the Contract

Countries globally have been reinforcing their military resources due to intense geopolitical tensions and amplified terrorist threats.

Military helicopters have been gaining importance owing to advancements and the integration of new tactical and logistical features. CH-53K aircraft is designed to be intelligent, reliable, low maintenance and survivable in the most austere and remote forward operating bases and this has been providing ample opportunities for Lockheed Martin to win production and modification contracts for the same in 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.

Prospects

The United States is the largest exporter of military weaponries worldwide and continues to strengthen 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, which also have expertise in manufacturing military aircraft.

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 2.9%. The Zacks Consensus Estimate for 2022 sales implies growth of 2.4% from the 2021 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 such as 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 2022 sales implies growth of 6% from the 2021 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. Some of Textron’s renowned products include Beechcraft T-6C trainer and AT-6 Wolverine.

TXT stock boasts a long-term earnings growth rate of 15.2%. The Zacks Consensus Estimate for 2022 sales implies growth of 4.1% from the 2021 reported figure.

Price Movement

In the past year, shares of Lockheed have gained 41.9% against the industry’s 2.8% 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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The Boeing Company (BA) : Free Stock Analysis Report

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