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Lockheed Martin's Unit Wins $556M Deal to Build Black Hawk

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Lockheed Martin Corp.’s LMT business unit, Sikorsky Aircraft, recently secured a modification contract for production of Black Hawk helicopters. The deal was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL.

Valued at $556.2 million, the contract is expected to be completed by Jun 30, 2021. Per the terms of the deal, the company will also offer associated services for program system management, engineering, technical data and publications related to the Black Hawk helicopters.

Black Hawk’s Significance

The Black Hawk is the primary medium lift helicopter for the U.S. Army that performs a wide range of missions encompassing Air Assault, MEDEVAC, CSAR, Command and Control and VIP transport.

Currently, the modern variant of this utility aircraft is being used to provide fire suppression when supporting ground troops, as well as armed escort. With digital avionics, powerful General Electric (GE) engines, high strength airframe structures and composite wide chord rotor blades, today’s BLACK HAWK platform offers better survivability and situational awareness. It can also fly higher and carry more than its predecessors ever did.

Lockheed’s Potential in the Combat Helicopter Market

While growing political unrest among the nations in the Middle East has boosted demand for weaponries in countries like Bahrain, Saudi Arabia and Iraq, frequent conflicts between Russia and European countries have bolstered the need for defense products in Europe. Meanwhile, following a sustained period of growth, many Southeast Asian countries are building up military capabilities and have thus expanded their defense budget over the past couple of years. With the United States being the largest weapons exporters in the world, the aforementioned global unrest has been ushering in contract wins for U.S. defense biggies like Lockheed Martin.

Moreover, political unrest in the United States due to its tensed relationship with countries like North Korea and Iran has led the United States to boost its defense arsenal over the past few years. With combat helicopters constituting major part of top notch defense products, growth opportunities for the military helicopter market have increased.

It is imperative to mention in this context that Lockheed’s Sikorsky is a prominent provider of combat helicopter and its Black Hawk multirole helicopter serves the U.S. military and the armed forces of 28 other countries worldwide as a tough, reliable utility helicopter. This surely highlights the significance of this family of helicopter in the global military helicopter market.

With the global military helicopter market projected to witness CAGR of 8.4% during the 2018-2023 period, per a report published by Market Research Future, we may expect Lockheed to benefit significantly from this improvement.

Price Movement

In a year’s time, shares of Lockheed have gained 47.1% compared with the industry’s 27.6% rally.

Zacks Rank & Key Picks    

Lockheed Martin currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space are L3Harris Technology Inc LHX, Leidos Holdings, Inc. LDOS and Air Industries Group AIRI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

L3Harris’ long-term growth estimate currently stands at 10.4%. The company delivered average positive earnings surprise of 5.02% in the last four quarters.

Leidos delivered average positive earnings surprise of 8.93% in the last four quarters. Its long-term growth estimate currently stands at 7.5%.

Air Industries Group delivered average positive earnings surprise of 52.78% in the last four quarters. The Zacks Consensus Estimate for 2019 loss has increased 63.6% to 4 cents over the past 60 days.

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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
Air Industries Group (AIRI) : Free Stock Analysis Report
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
L3Harris Technologies Inc (LHX) : Free Stock Analysis Report
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