Defense contractor, Lockheed Martin Corporation (LMT) has received a $45.3 million contract to upgrade 22 Finnish Army M270 Multiple Launch Rocket Systems (MLRS). The upgrade will incorporate the Universal Fire Control System and other enhancements enabling the launchers to fire precision GPS-guided munitions. This upgrade will allow the use of the full range of MLRS precision munitions.
Headquartered in Bethesda, Maryland, Lockheed Martin is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The company’s customer base includes the U.S. government, foreign governments, and other commercial buyers.
Lockheed Martin finished first-quarter 2011 with a backlog of $80 billion versus $78.40 billion at fiscal-end 2010. Of this, $31.30 billion belonged to the Aeronautics segment and $22.60 billion to the Electronic Systems segment. The company’s backlog could see further upside in the near future through satellite contracts for its Space systems business and successful negotiation for further fixed contract F-35 follow-on orders. The company competes primarily with The Boeing Company (BA) and Northrop Grumman Corporation (NOC).
Going forward, we expect Lockheed Martin to register a stable performance thanks to its leveraged presence in the Army, Air Force, Navy and IT programs. Lockheed Martin has significant upside potential based on the Obama administration’s focus on Intelligence Surveillance Reconnaissance (ISR), unmanned systems, force protection, cyber security and missile defense.
Lockheed Martin expects its fiscal 2011 earnings per share to be in the range of $6.95–$7.25 and sales in the range of $45.75 billion–$47.25 billion.
However, we believe market pessimism is fully accounted for in the current valuation of the defense behemoth, which is priced at a discount to both industry peers and the overall market. We maintain our long-term Neutral recommendation for the stock, which is supported by a short-term Zacks #3 Rank (Hold).
BOEING CO (BA): Free Stock Analysis Report
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