Lockheed Martin has completed its $3.45 billion acquisition of Ultra Maritime, a maker of sonobuoys, towed sonar arrays and hull-mounted sonar systems, on Oct. 26, after announcing the deal on July 6. Ultra will be folded into Lockheed's rotary and mission systems (RMS) division, which generated $19.7 billion in revenue and a 6.6% operating margin last year, well below the company's 10.7% average. Based on the 17% annual revenue growth Ultra posted under Advent, the article estimates it could now be doing as much as $1 billion in annual revenue, though its financials have not been disclosed. The deal implies a price-to-sales ratio of about 3.5 for Ultra, nearly twice the multiple of Lockheed's own shares. The author believes that with the stock at 22 times earnings and a 2.3% dividend yield, the bet is probably worth the risk, though only time will tell whether it pays off.
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