The largest US defense contractor, Lockheed Martin Corporation (LMT) secured a part of Social Security Administration’s (SSA) seven-year $2.8 billion indefinite delivery, indefinite quantity (IDIQ) contract.
Under the terms of the Information Technology Support Services Contract (ITSSC), Lockheed Martin will be providing information technology solutions related to areas like Design, Development, Testing, and Maintenance; and Data Base Administration, Imaging, and Document Management.
Lockheed Martin is the largest provider of IT services, systems integration, and training to the U.S. Government. Apart from serving the Department of Defense and other federal agencies, the company derives its business from foreign governments as well as from commercial sales of its products, services and platforms.
In the second quarter of 2010, Lockheed Martin reported a 3.0% year-over-year increase in total revenue amounting to $11.4 billion. The company’s earnings per share from continuing operations spiked 4.8% to $1.96, while GAAP EPS increased 18.1% to $2.22.
The prospects of Lockheed Martin, to a large extent, depend upon defense spending, and we believe the company stands well positioned to benefit from higher defense outlays. Also, the company’s focus on debt repayment and share buyback is encouraging and will continue to improve shareholder return.
However, political uncertainty makes future defense budgets vulnerable to cutbacks. Moreover, execution risk of major programs and higher pension liability are primary causes of concern. Prime competitors of the company include Boeing Co. (BA), Northrop Grumman Corporation (NOC), and Raytheon Co. (RTN).
We currently maintain a Zacks #3 Rank (Hold) and a long-term Neutral recommendation on the stock.
BOEING CO (BA): Free Stock Analysis Report
LOCKHEED MARTIN (LMT): Free Stock Analysis Report
NORTHROP GRUMMN (NOC): Free Stock Analysis Report
RAYTHEON CO (RTN): Free Stock Analysis Report
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