Lockheed Martin Wins $106M Deal To Support Apache Helicopter

Lockheed Martin Corp. (NYSE:LMT) recently secured a $106.1-million contract to provide Pilot Night Vision Sensor systems, subcomponents and other technical services for the Apache (NYSE:APA) Attack Helicopter. The contract was awarded by the U.S. Army Contracting Command, Rock Island Arsenal, IL.

Work related to the deal is expected to be complete by Mar 31, 2023. The sensor systems along with the technical services will be delivered to the U.S. Army, Netherlands and the United Kingdom.

A Brief Note on the M-TADS/PNVS Systems

The Modernized Target (NYSE:TGT) Acquisition Designation Sight/Pilot Night Vision Sensor (M-TADS/PNVS), also known as Arrowhead, is an electro-optical sensor that provides enhanced situational awareness to Apache’s aircrew with greater performance and survivability. It offers long-range, precision engagement and pilotage solution for missions conducted during the day, night or adverse weather conditions.

What’s Favoring Lockheed Martin?

Rising need for improved military performance, integration of high-performance miniaturized electronic systems and increasing demand for lightweight textiles are driving growth for the military sensor market. Being a prominent defense contractor in the United States, Lockheed Martin has been winning a number of contacts from Pentagon, related to sensor systems and their upgrades.

Steady and regular order inflows for the company’s Rotary and Mission Systems (RMS) unit, which manufactures varied sensor systems, tend to drive the top line. Notably, the segment recorded first-quarter 2019 net sales of $3.76 billion, owing to higher sales of its integrated warfare systems and sensors (IWSS) program. In line with this, we may expect the latest contract to drive RMS revenues in the days to come.

Furthermore, the proposed fiscal 2020 defense budget provisions for a spending plan of a whopping $57.7 billion on aircraft, which includes an allotment of $1 billion for 48 Boeing’s (NYSE:BA) AH-64E Apache Attack Helicopters. If approved, demand for Lockheed Martin’s vision sensor systems are expected to grow, which in turn is likely to boost the company’s overall profit margin.

Price Performance

Shares of the company have gained 37.1% in the past twelve months compared with the industry’s growth of 20.7%.

Zacks Rank & Key Picks

Lockheed Martin currently carries Zacks Rank #3 (Hold).

A few better-ranked stocks in the same industry are Northrop Grumman Corp. (NYSE:NOC) and Leidos Holdings (NYSE:LDOS) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Northrop Grumman came up with average positive earnings surprise of 18.50% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has increased 2.26% to $19.42 in the past 60 days.

Leidos Holdings came up with average positive earnings surprise of 6.81% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 1.54% to $4.60 in the past 60 days.

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