Lockheed Martin Corporation (LMT) announced that it received a contract from the U.S. Navy worth $97 million for production of the Aegis Weapon System for destroyer DDG-113. The contract value also includes advance funding for procurement of additional systems for DDG 14 and 15.
As per the contract, Lockheed will produce four Aegis multi-mission signal processors, three for the destroyers and one for the U.S. Navy’s Surface Combat System Center on Wallops Island, Virginia.
This contract also contains an option for an Aegis Ashore system. This land based defense system will be developed in the lines of existing sea-based Aegis Ballistic Missile Defense technology. The Aegis Ashore system is aimed to safeguard U.S. and allied troops in Europe against short- and medium-range ballistic missile threats.
Aegis Weapon System is a sea-based Ballistic Missile Defense System. The system can simultaneously attack targets in land and sea, while automatically implementing defenses to protect the fleet against hostile aircraft and missiles. Apart from the U.S Navy this defense system is used by the navies of Australia, Japan, Norway, the Republic of Korea and Spain.
The operating earnings of the company during the third quarter 2010 were $1.57 per share versus $2.07 per share reported in the year-ago quarter. During the third quarter earnings call, Lockheed lowered its full-year operating earnings for 2010 to the range of $6.75 to $6.95 per share from $7.15 to $7.35 per share earlier.
The new guidance excludes expected profit of $60 million from the Enterprise Integration Group, as this business is presently treated as discontinued operations.
The Zacks Consensus Estimates for fourth-quarter 2010, fiscal year 2010 and fiscal year 2011 are $2.13 per share, $7.29 per share and $6.62 per share, respectively.
Lockheed Martin currently retains a Zacks #4 Rank (short-term Sell rating). We provide a long-term Underperform rating on the stock taking into account the third quarter earnings miss, overhang from defense budget cuts, a declining order backlog and cost over-run on projects.
Based in Bethesda, Maryland, Lockheed Martin operates globally in the fields of research, design, development, manufacture, integration, operation, and sustainment of advanced technology systems and products.
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