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Lockheed Martin Secures $78M Navy Deal for Production of UWS

Lockheed Martin Corp.’s LMT Rotary and Mission Systems (RMS) business unit recently won a $77.8 million modification contract for the production of the Navy’s Surface Ship Undersea Warfare System (UWS). The deal was awarded by the Naval Sea Systems Command, Washington, DC.

Per the terms of the agreement, Lockheed Martin will develop and integrate advanced capabilities and technical insertion baselines of the USW systems. Majority of the work related to the deal will be executed in Lemont Furnace, PA and Clearwater, FL. The project is expected to get completed by May 2021.

A Brief Note on Surface Ship UWS

Lockheed Martin’s Surface Ship UWS combat system is a naval anti-submarine warfare designed to search, detect, classify and track underwater contacts. These warfare systems are also equipped to attack enemy submarines, mines and torpedoes.

What Favors Lockheed Martin?

In recent times, heightened geo-political tensions looming across the globe and rapid modernization of China’s submarine fleet have compelled the United States to modernize its naval defense. Being one of the major manufacturers for maritime combat and undersea warfare systems, Lockheed Martin hugely benefits from such modernization initiatives, in terms of significant contract wins.

In line with this, Research and Markets firm expects the global undersea warfare systems market to witness a significant growth over the 2017-2021 period owing to a rising number of underwater threats and attacks. By 2021, this market is projected witness a CAGR of 6.6% to a value worth $8.26 billion from the 2016 level. Being the Pentagon’s largest defense contractor, Lockheed Martin is expected to capture a sizeable share of this expanding market, thereby bolstering its dominant position in the defense space

Price Performance

In a year’s time, shares of Lockheed Martin have lost 14.2% compared with the industry’s 6.0% decline. The underperformance may have been caused by the intense competition the company faces in the aerospace-defense space for its broad portfolio of products and services both domestically and internationally.



Zacks Rank & Key Picks

Lockheed Martin currently carries a Zacks Rank #3 (Hold). A few better-ranked companies in the same sector are AeroVironment, Inc. AVAV, The Boeing Company BA and Heico Corporation HEI. While AeroVironment and Boeing sport a Zacks Rank #1 (Strong Buy), Heico has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AeroVironment delivered average positive earnings surprise of 257.01% in the last four quarters. The Zacks Consensus Estimate for fiscal 2019 earnings has moved 33.3% north to $1.48 over the past 90 days.

Boeing delivered average positive earnings surprise of 28.01% in the trailing four quarters. The Zacks Consensus Estimate for 2019 earnings has climbed 4.53% to $18.22 over the past 90 days.

Heico’s long-term growth rate for the next five years currently stands at 12.10%. The Zacks Consensus Estimate for 2019 earnings has increased 4% to $2.08 over the past 90 days.

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