Lockheed Martin Wins $72M Deal To Support Trident II Missile

Lockheed Martin Corp.’s (NYSE:LMT) Space Systems business unit recently secured a modification contract for providing deployment system support to Trident II (D5) missile. Work related to this deal is scheduled to be over by Sep 30, 2022.

Valued at $71.6 million, the contract was awarded by the Strategic Systems Programs, Washington, D.C. Majority of the work will be carried out in Cape Canaveral, FL; Sunnyvale, CA and Magna, UT; while the rest will be executed at various other locations across the United States. The contract will utilize fiscal 2018 as well as fiscal 2017 weapons procurement, research, development, test, and evaluation funds to complete the task.

A Brief Note on Trident II (D5)

Trident II (D5) is the latest generation of submarine-launched fleet ballistic missiles, developed and produced by Lockheed Martin. It was first deployed in 1990 and is currently aboard the OHIO-class and British VANGUARD-class submarines.

These missiles are equipped with multiple independently targetable re-entry vehicles and thermonuclear warheads.

What’s Favoring Lockheed Martin?

Lockheed Martin’s Space Systems unit is the prime contractor of the Navy's Trident missile. The company supplies technical and logistical support at sites where the missiles are deployed.Notably, the Trident II D5 Fleet Ballistic Missile is a program with the U.S. Navy for the only submarine-launched intercontinental ballistic missile currently in production in the United States.

With frequent missile threats that the United States has been receiving from North Korea, in past few months, a subsequent rise in contracts from Pentagon related to enhancement of the nation’s missile security has been observed. In particular missile-makers Raytheon Company (NYSE:RTN) as well as Lockheed Martin has been winning ample orders to this end.

Given Trident II (D5) is one of the most advanced U.S. Navy’s missile system, Lockheed Martin has been securing valuable contracts for this product, like the one worth $419 million it won last month. This, along with the latest contract win, is expected to boost the company’s Space Systems business.

Moreover, the fiscal 2018 defense policy has authorized the United States to spend $700 billion on defense. This has further enhanced the prospect of increased order flow from Pentagon for major defense contractors like Lockheed Martin, The Boeing Company (NYSE:BA) , Northrop Grumman Corp (NYSE:NOC) and Huntington Ingalls Industries, Inc. (NYSE:HII) .

Price Movement

Lockheed Martin’s stock has moved up about 14.1% in last six months compared with the broader industry’s gain of 19.6%. This underperformance could have been caused by the intense competition that the company faces for its broad portfolio of products and services domestically as well as internationally.

Zacks Rank

Lockheed Martin carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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