Lockheed Martin Corp.’s LMT business unit, Sikorsky Aircraft Corp., has won a modification contract from the U.S. Navy  to provide support services for VH-3D/VH-60 Executive Helicopter Special Progressive Aircraft Rework sustainment.

Contract Details

The contract is valued at $138.0 million. It was awarded by the Naval Air Systems Command, Patuxent River, MA.

Per the contract, Sikorsky will provide services including security, project engineering, integrated logistics support, VIP Helicopter training and program support for the Presidential Helicopters Program.

Work is scheduled to be completed by Nov 2022 and will be performed in Stratford, CN.

A Brief Note on VH-3D/VH-60 Executive Helicopter

The VH-3D and the VH-60N carry the chief executive, vice president, cabinet and foreign dignitaries and are known as 'Marine One' when they carry the President of the U.S.

The Sikorsky VH-3D Sea King is a primary short-range transport aircraft that is operated by Marine Corps aviators from HMX-1. The VH-60N is based on the Army’s UH-60 Black Hawk and the Navy’s SH-60 Seahawk aircraft. The H-60 family of helicopters is extensively used throughout the Department of Defense for anti-submarine warfare, search and rescue, drug interdiction, anti-ship warfare, cargo lift and special operations.

The helicopters comprise day/night/all-weather operations, self-contained navigation system, Global Positioning System (“GPS”), Traffic Collision Avoidance System (“TCAS”), survivability systems and crash-survivable flight information recorder sensor.

What’s in Favor of Lockheed Martin?

Lockheed Martin is the largest U.S. defense contractor with a platform-centric focus that guarantees a steady inflow of follow-on orders from a leveraged presence in the Army, Air Force, Navy and IT programs. The company witnesses persistently robust demand for its programs in the international markets.

Meanwhile, the fiscal 2017 budget proposal reflects an annual increase of approximately $2.2 billion compared with the fiscal 2016 budget. The increased spending would be allocated to certain key areas that can unlock significantly higher opportunities for Lockheed Martin.

Sikorsky is a part of the Rotary and Mission System segment of Lockheed Martin. The sales of the segment in the third quarter were $3.3 billion, an increase of 55% from the prior-year quarter driven by higher revenues from Sikorsky. Sikorsky contributed $1.2 billion to sales during the quarter.

Given the company’s proven success in the combat aircraft business line, the company is expected to win more such contracts going forward. This in turn will significantly boost future growth of this business division.

Price Movement

Lockheed’s stock has improved about 17.4% in the last one year, outperforming the Zacks categorized Aerospace/Defense industry’s gain of 10.8%. This could be because Lockheed continues to witness a steady flow of contracts from the Pentagon and other international customers.

Zacks Rank & Other Key Picks

Lockheed Martin currently has a Zacks Rank #2 (Buy). A few other favorably placed stocks in the aerospace and defense space include Engility Holdings, Inc. EGL, Northrop Grumman Corporation NOC and Leidos Holdings, Inc. LDOS.

On an average, Engility has delivered a positive earnings surprise of 23.19% in the trailing four quarters. The company’s 2016 earnings estimates increased 13.4% over the last 60 days. Engility sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Northrop Grumman, another Zacks Rank #1 stock, delivered a positive earnings surprise of 8.29% in the trailing four quarters. The company’s 2016 earnings estimates inched up 0.1% in the last 30 days.

Leidos Holdings carries a Zacks Rank #2. The company’s 2016 earnings estimates increased 10.6% over the last 30 days. On an average, the company has delivered a positive earnings surprise of 12.20% in the trailing four quarters.

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Source:finance.yahoo.com

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