CACI CACI International Inc

Lockheed Martin Corporation (LMT) has been chosen as one of the seven recipients of a contract, with a potential total value of $899.5 million, by the U.S. Navy to provide battlespace awareness technology. Other members selected for the deal were Booz Allen Hamilton Holding Corporation (BAH), CACI International Inc. (CACI), Centurum, L-3 Communications Holdings Inc. (LLL), Science Applications International and Scientific Research.

The contract is a multiple-award indefinite-delivery/indefinite-quantity (“IDIQ”) order and expected to be finished in November 2017. The base year value of this agreement is $179.9 million. The Space and Naval Warfare Systems Center Atlantic, Charleston, South Carolina is the contracting authority for this agreement.  

Per the contract, the companies will not only provide devoted hardware services, but will also develop, incorporate and examine the intelligence, battle-space awareness and information process functions.

Battlespace awareness is a military application utilized by the commanders to foresee the courses of action before positioning their troops and platforms into the area of operations. This process highly depends on a collection of intelligence to make commanders aware of the latest situations of the battle field.

From the past contract history, it is evident that Lockheed Martin has a strong pact with the U.S. Navy and tries to meet its commitments in terms of maintaining products and services quality along with delivery timing. Few days ago, the company entered into an agreement, worth $30 million, with the navy to put together new avionics and software on multiple C-130T aircrafts. We believe that strong relationship along with loyal alliance between both the parties has helped Lockheed Martin to become one of the recipients of this contract.  

We know that the U.S. administration is currently focusing on the Intelligence Surveillance Reconnaissance (“ISR”), unmanned systems, force protection, cybersecurity, and missile defense. In the present context, we consider this contract as a fresh oxygen provider for the company. The successful completion of this deal will enable Lockheed Martin to get more contracts from the U.S. defense establishment in the future and will subsequently improve the company’s forthcoming contract pipeline.

In addition, we appreciate Lockheed Martin’s continuous effort toward improving shareholders’ return supported by its focus on steady debt repayment plans, ongoing share repurchase program and stable increase in dividend.

However, we are skeptical about the budget deficits and political ambiguity, which might lead to future defense budget-cutbacks.

Lockheed Martin Corporation currently has short-term Zacks #3 Rank (Hold rating).

Bethesda, Maryland-based Lockheed Martin Corporation is a global security and aerospace company that is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. With a market capitalization of $28.43 billion, the company has 123,000 full time employees.

 
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