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Lockheed (LMT) Wins Deal to Support CH-53K Helicopter Program

·3 min read

Lockheed Martin Corp.’s LMT business unit, Sikorsky, recently clinched a 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 $36.4 million, the contract is estimated to be completed by December 2025. Per the terms of the contract, Lockheed will supply spare parts for CH-53K aircraft, along with offering repair and maintenance support.

A major portion of the work related to this deal will be carried out in Stratford and Windsor Locks, CT as well as Quebec, Canada.

Benefits of the Contract

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

Among other combat arsenals and weaponries, military helicopters have also been gaining importance owing to advancements and the integration of new tactical and logistical features. This has provided ample opportunities for Lockheed Martin to win production and modification contracts for helicopters 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, which is the largest exporter of military weaponries worldwide, is also strengthening 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 bear 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 2.2%. The Zacks Consensus Estimate for 2022 sales implies growth of 2% 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 14.8% 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 12.5%. The Zacks Consensus Estimate for 2022 sales implies growth of 6% from the 2021 reported figure.

Price Movement

In the past year, shares of Lockheed have gained 18.7% against the industry’s 34.6% decline.

Zacks Investment Research
Zacks Investment Research


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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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