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Lockheed's (LMT) Arm Wins Deal to Support CH-5K Program

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  • LMT
  • HEI-A
  • AJRD

Lockheed Martin Corp.’s LMT business unit, Sikorsky, recently clinched a modification contract to support CH-53K heavy-lift helicopter. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.

Details of the Deal

Valued at $21.2 million, the contract is scheduled to be completed in June 2022. Per the contract terms, this new modification aims to provide aircraft maintenance in support of the CH-53K data transfer unit and defensive electronic countermeasure system replacement phase three flight test.

The majority of work related to this deal will be executed in Patuxent River, MD.

Growing Importance of CH-53K Helicopter

The CH-53K helicopter takes forward Sikorsky’s 50 years of manufacturing and operational success with its CH-53A, CH-53D/G and CH-53E predecessors. The new heavy lifter allows the U.S. Marine Corps and international militaries to move troops and equipment from ship to shore, and to higher altitude terrains more quickly and effectively. It is also effective in handling missions like humanitarian aid, troop transport, casualty evacuation, support of special operation forces, and combat search and rescue.

What Favors Lockheed?

Lockheed’s Sikorsky unit provides military and rotary-wing aircraft to all five branches of the U.S. armed forces along with military services and commercial operators in 40 nations. Hence, this unit serves as a major revenue-generating division for this defense contractor.

In recent times, increasing geopolitical tensions across the world have prompted both developed and developing nations to effectively increase their defense budget. It is imperative to mention in this context that the fiscal 2022 defense budget proposal reflects funding worth $753 billion for U.S. defense programs, implying an annual increase of 1.7%. Interestingly, as part of this proposal, a sum of $1.7 billion has specifically been allotted to procure nine Sikorsky's CH-53K King Stallion helicopters. On approval of the proposal, orders for CH-53K King Stallion’s wide variety of military products would likely increase, thereby boosting Lockheed’s prospects.

Price Movement

In the past year, shares of Lockheed Martin have lost 8.8% compared with the industry’s decline of 32.6%.

Zacks Investment Research
Zacks Investment Research

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Zacks Rank & Stocks to Consider

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

Some better-ranked companies in the same sector are Airbus Group EADSY, Aerojet Rocketdyne AJRD and HEICO Corp. HEI. While Airbus sports a Zacks Rank #1 (Strong Buy), Aerojet and Heico carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Airbus delivered an average earnings surprise of 69.70% for the last four quarters. Airbus’ consolidated revenues, as of Sep 30, 2021, increased 17% on the back of improved jet deliveries.

Airbus expects to deliver 600 commercial aircraft in 2021. EADSY has gained 11.6% in the past year.

Aerojet Rocketdyne delivered an earnings surprise of 23.40% in the last-reported quarter. The Zacks Consensus Estimate for its current-year earnings has improved 3.6% over the past 60 days.

Aerojet Rocketdyne’s third-quarter 2021 sales increased 3.3% year-over-year. AJRD has gained 11% in the past year.

Heico delivered an average earnings surprise of 5.83% for the last four quarters. Heico’s third-quarter fiscal 2021 earnings per share of 56 cents surpassed the Zacks Consensus Estimate by 3.7% and improved 40% year over year.

Heico’s third-quarter net sales increased 22.1% year over year to $471.71 million. HEI has gained 13.9% in the past year.

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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report

Airbus Group (EADSY) : Free Stock Analysis Report

Heico Corporation (HEI) : Free Stock Analysis Report

Aerojet Rocketdyne Holdings, Inc. (AJRD) : Free Stock Analysis Report

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