Lockheed Martin (LMT) Jumps on Ocean Power (OPTT) Deal

NEW YORK (TheStreet) -- Micro-cap Ocean Power Technologies (OPTT) is soaring on Tuesday on the announcement it is working with Lockheed Martin (LMT) on the world's largest project harnessing wave energy in a deal worth $205 million.

By early afternoon, shares have exploded 47% to $3.38, while Lockheed Martin has added 2.3% to $157.56.

Lockheed Martin, in partnership with Victorian Wave Partners, will develop the project off the coast of Victoria, Australia, using wave energy converter technology from Ocean Power. Upon completion in as early as 2018, the project will be enough to power 10,000 homes, or 62.5MW.

"Development of this project draws on core strengths of both our companies and represents an important undertaking for commercialization of the PowerBuoy technology," said Ocean Power CEO Charles Dunleavy in a statement.

Ocean Power's technology converts wave energy, via the bobbing of a buoy, into clean electricity. The mechanical energy drives an electrical generator, which transmits power through an underwater cable.

Must Read: Why Ocean Power Technologies (OPTT) is Spiking Today

TheStreet Ratings team rates LOCKHEED MARTIN CORP as a Buy with a ratings score of A+. The team has this to say about their recommendation:

"We rate LOCKHEED MARTIN CORP (LMT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, LMT's share price has jumped by 73.21%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LMT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has significantly increased by 171.33% to $938.00 million when compared to the same quarter last year. In addition, LOCKHEED MARTIN CORP has also vastly surpassed the industry average cash flow growth rate of -9.27%.
  • LOCKHEED MARTIN CORP's earnings per share declined by 13.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LOCKHEED MARTIN CORP increased its bottom line by earning $9.04 versus $8.34 in the prior year. This year, the market expects an improvement in earnings ($10.55 versus $9.04).
  • LMT, with its decline in revenue, underperformed when compared the industry average of 7.7%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Aerospace & Defense industry and the overall market, LOCKHEED MARTIN CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.