Lockheed Martin Corp.LMT recently clinched a contract for providing Army training aids, devices, simulators and simulations, maintenance, sustainment, operations and support to instrumentation systems and live-fire ranges. Work related to the deal is expected to be completed by Apr 30, 2020.

Valued at $3.5 billion, the contract was awarded by the U.S. Army Contracting Command, Orlando, FL. Per the terms, work locations and funding to perform the task will be decided with each order.

Lockheed's Training & Simulation Solutions

As the world's leading systems integrator, Lockheed Martin delivers comprehensive training and logistics solutions to prepare military personnel for the most complex missions. Its training programs include teaching pilots to fly the world's most advanced fighter jet, leading a convoy through city streets and preparing medical professionals for providing the best possible patient care, among others.

Additionally, to keep the U.S. Army ready for battle, Lockheed Martin provides simulation solutions where training meets reality. In this regard, the company's Prepar3D is a visual simulation platform that allows users to create training scenarios across aviation, maritime, and ground domains. Users can train anywhere in the virtual world from underwater to sub orbital space.

Our View

Lockheed Martin's Rotary and Mission Systems (RMS) business segment provides simulation and training services. In the fourth quarter of 2017, the RMS segment generated net sales of $4.4 billion, representing 28.7% of the company's total sales and a year-over-year improvement of 14.2%. Now that the company has one the aforementioned multi-billion contract, we may expect this business segment to reflect similar strong performance in the first quarter of 2018 as well.

Meanwhile, last month, President Trump proposed the fiscal 2019 budget that aims at increasing the end strength for the Army, Navy and Air Force by 25,900 compared with the fiscal 2018 budget. Moreover, this is the second full-budget request from the President for initiating the rebuilding process for the U.S. military that Trump has been consistently emphasizing on. The rebuilding process will involve additional investments in near-term readiness, which we believe includes providing vigorous training to the soldiers and offering simulation solutions to make them combat-ready.

Being the leading contractor of the Pentagon, Lockheed Martin is likely to be a huge beneficiary of this budget, if approved.

Price Performance

Shares of Lockheed Martin have rallied about 24.4% in a year compared with the broader industry 's gain of 44.2%. This underperformance might have been caused by intense competition that the company faces for its broad portfolio of products and services in domestic and international markets.

Zacks Rank & Key Picks

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

A few better-ranked stocks in the same industry are Boeing BA , Huntington Ingalls Industries HII and Wesco Aircraft Holdings WAIR . While Boeing and Huntigton Ingalls sport a Zacks Rank #1 (Strong Buy), Wesco Aircraft carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Boeing delivered an average positive earnings surprise of 20.69% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings moved up $3.06 over the past 90 days.

Huntington Ingalls delivered an average positive earnings surprise of 3.85% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings climbed $5.44 over the past 90 days.

Wesco Aircraft pulled off a positive earnings surprise of 25% in the last reported quarter. The Zacks Consensus Estimate for 2018 earnings moved north by 6 cents over the past 90 days.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.