Lockheed Martin (LMT) Wins Navy Deal For MK 48 Torpedoes

Lockheed Martin Corp. LMT has won a contract from the U.S. Navy to build the guidance and control systems for the MK 48 Mod 7 torpedoes. The contract has a potential value of $424.7 million, if all options are excercised.

Per the contract, Lockheed Martin will supply MK-48 common broadband advanced sonar system upgrade kits as well as MK 48 heavyweight torpedo guidance and control sections to the Navy. It also covers the testing of equipment, spares, production support material, engineering support, and hardware repair support.

These guidance and control systems will provide heavyweight torpedoes with improved bandwidth, and efficient targeting and tracking abilities, thereby enhancing the MK 48's efficiency as well as its counter-measure capacities.

The latest contract is part of a five-year initiative to grow the inventory of the MK 48 Mod 7 heavyweight torpedoes for the submarine fleet.

Over the next five years, the company may receive production orders for another 250 torpedoes from the Navy to be used as anti-submarine warfare (ASW) and anti-surface warfare (ASuW) weapons by all classes of submarines.

Work is scheduled to be complete by Dec 2019 and will be performed in Massachusetts, CA. The contract will use fiscal 2016 weapons procurement and spares funds.

The MK 48 is a heavyweight torpedo which can be launched from almost all military submarines. It is capable of tracking and destroying surface ships and submarines in shallow water as well as at depths of over 1,000 feet.

Lockheed Martin is the largest U.S. defense contractor with a platform-centric focus that guarantees a steady inflow of follow-on orders from its leveraged presence in the U.S. Army, Air Force, Navy and IT programs.

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

Stocks to Consider

Some better-ranked stocks in the aerospace and defense space include Engility Holdings, Inc. EGL , BAE Systems plc BAESY and CAE Inc. CAE, each carrying a Zacks Rank #2 (Buy).

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