Zacks_Analysts' Blog : Lockheed's C-130J for Qatar - Analyst Blog

Lockheed Martin Corporation (LMT) has delivered four C-130J Super Hercules airlifters to the State of Qatar. This is the first C-130J operator in the Middle-East.

The package provided by Lockheed Martin includes four aircrafts, aircrew and maintenance training, spares, ground support and test equipments. The company will also provide a team of technical specialists who will be based in Qatar during an initial support period.

The Lockheed Martin C-130J "Super" Hercules is a four-engine turboprop military transport aircraft. It is the newest version of the Hercules. The Hercules family has the longest continuous production run of any military aircraft in history. C-130J's crew includes two pilots and one loadmaster (no navigator or flight engineer is required).

The J-model is almost similar to the classic Hercules in general appearance. However, it has updated technology which includes Rolls-Royce AE 2100 D3 turboprops with Dowty R391 composite scimitar propellers, digital avionics, and reduced crew requirements.

These changes have improved advantage over its C-130E/H predecessors, such as 40% greater range, 21% higher maximum speed, and 41% shorter takeoff distance.

The J-model is available in a standard-length or stretched -30 variant. The State of Qatar will use the aircraft for humanitarian relief and military missions. The new airlift fleet shipment is expected to reach Qatar in October 2011.

Lockheed Martin has significant upside potential based on the Obama administration’s focus on Intelligence Surveillance Reconnaissance, unmanned systems, force protection, cybersecurity, and missile defense.

Also, we believe that shareholder return will continue to be shored up by the company’s focus on debt repayment, its ongoing share repurchase program and the incremental dividend.

These positives are dampened by defense budget cuts, headwinds in margins, higher pension liability and risk regarding retrenchment cost recovery. However, we believe that the market pessimism is fully accounted for in the current valuation.

On October 17, 2011, the company is expected to release its third quarter results. The Zacks Consensus Estimates for third quarter 2011 and fiscal year 2011 are currently at $1.80 per share and $7.53 per share, respectively. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

Headquartered in Bethesda, Maryland, Lockheed Martin is a global security company that is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The company mainly competes with The Boeing Company (BA) and Northrop Grumman Corporation (NOC).