Lockheed (LMT) Wins Deal to Support AEGIS Combat System
Lockheed Martin Corp.’s LMT business segment, Rotary and Mission Systems, recently secured a modification contract involving the AEGIS combat system. The award has been offered by the Naval Sea Systems Command, Washington, D.C.
Details of the Deal
Valued at $13.5 million, the contract is expected to get completed by May 2023. Per the terms of the deal, Lockheed will provide AEGIS combat system engineering agent efforts, which include the design, development, integration, test and delivery of Advanced Capability Build 20.
Work related to this contract will be executed in Moorestown, NJ.
Importance of the Aegis Combat System
Manufactured by Lockheed Martin, the Aegis Weapon System is the world’s premier naval air defense system and the sea-based element of the U.S. Ballistic Missile Defense System. A key component of this naval warfare system is the SPY-1 multi-function phased array radar, which is the world’s most advanced and versatile maritime radar. It is scalable to meet the mission needs of a range of ships, from corvettes to aircraft carriers.
Globally, the Aegis Weapon System is at sea or part of current new ship construction programs for more than 100 ships.
Looking Ahead
Countries worldwide have been reinforcing their military resources due to intense geopolitical tensions and amplified terrorist threats. This has spurred demand for missile systems. The United States, the largest exporter of military weaponries worldwide, is also focused on strengthening military resources, with Aegis being one of the key defense programs.
This is quite evident from the allotment of the $24.7-billion investment plan for missile defense, included in the U.S. fiscal 2023 defense budget. Hence, we may expect a solid flow of contracts like the latest one from the Pentagon involving Aegis systems, which in turn would boost LMT’s future revenue performance.
Peer Prospects
No doubt the solid investment plan for missile defense, as mentioned above will also benefit other U.S. defense contractors involved in missile manufacture like Northrop Grumman NOC, Raytheon Technologies RTX and General Dynamics GD.
Northrop is a prominent developer of missile systems and counter systems, including strategic deterrents, and subsystems and components. To strengthen its position in the missile market, Northrop acquired Orbital ATK in 2018, which used to be one of the industry leaders in providing missile components across air, sea and land-based systems.
Currently, Northrop boasts a long-term earnings growth rate of 2.2%. NOC shares have returned 33.1% in the past year.
Raytheon’s Missiles & Defense (RMD) is a leading designer, developer, integrator, producer and sustainer of integrated air and missile defense systems, with the unit serving as a prime contractor or major subcontractor on numerous missile and related programs with the U.S. Department of Defense.
Raytheon’s long-term earnings growth rate is pegged at 10.4%. Shares of RTX have returned 8.2% to its investors in the past year.
General Dynamics’ Ordnance and Tactical Systems is the system integrator of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases, and launches tubes for tactical and strategic missiles.
General Dynamics boasts a long-term earnings growth rate of 10.2%. GD shares have returned 17.6% in the past year.
Price Movement
In the past year, shares of Lockheed Martin have rallied 21.8% against the industry’s fall of 5.1%.
Image Source: Zacks Investment Research
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
General Dynamics Corporation (GD) : Free Stock Analysis Report
Raytheon Technologies Corporation (RTX) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
