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Lockheed (LMT) Wins $524M Deal to Support F-35 Jet Program

·4-min read

Lockheed Martin Corp.’s LMT business segment, Aeronautics, recently won a modification contract involving the F-35 fighter jet program. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.

Details of the Deal

Valued at $524.1 million, the contract is expected to get completed by June 2025. Per the terms of the agreement, Lockheed will procure long-lead time materials, parts, components, and efforts for the production of 14 F-35A aircraft and four 15 F-35B aircraft.

The contract will cater to the government of Italy. The majority of the work related to this deal will be carried out in Fort Worth, TX.

F-35 to Remain a Growth Driver

The recent tiff between Russia and Ukraine led to nations increasing their defense spending on military equipment and arsenals to strengthen their defense systems. Military aircraft with multi-mission capabilities are an integral part of any efficient defense system.

It is imperative to mention that Lockheed Martin enjoys a dominant position in the global military aircraft space with its F-35 fleet. The stealth aircraft boasts features that make it an ideal choice for many nations. Moreover, LMT’s constant efforts to modernize and upgrade the aircraft with advanced technologies and enhance its capabilities to meet the current warfare needs boost demand significantly.

The F-35 program remained the largest revenue generator for its Aeronautics business unit and accounted for 68% of Aeronautics’ net sales in 2021.
Lockheed Martin has delivered 814 F-35 airplanes since the program's inception, with 169 jets in backlog till June 2022. This, along with the latest contract win, surely boosts the sales expectation for the Aeronautics business segment.

The stealth aircraft is expected to witness a continued upswing in its demand as the U.S. government’s current inventory objective is pegged at 2,456 aircraft for the U.S. Air Force. This, in turn, should bolster LMT’s revenues from the military aircraft arena.

Growth Prospects

Per Mordor Intelligence projections, the global military aircraft market is expected to witness a CAGR of more than 4% during 2022-2031. Such projections indicate immense opportunities for Lockheed Martin to further reap the benefits of military aircraft market expansion.

Prominent defense majors that are involved in the manufacturing of military aircraft are Northrop Grumman NOC, Airbus Group EADSY and Textron TXT.

Since its inception, Northrop Grumman has been a pioneer in the development of manned aircraft. From fighter jets and stealth bombers to surveillance and electronic warfare, Northrop Grumman has been providing manned solutions to customers worldwide. It has built some of the world’s most advanced aircraft, ranging from the innovative B-2 Spirit stealth bomber to the game-changing E-2D Advanced Hawkeye.

Northrop Grumman has a long-term earnings growth rate of 2.2%. The Zacks Consensus Estimate for NOC’s 2022 sales indicates an improvement of 2% from 2021’s reported figure.

Airbus Group’s military aircraft comprises the A400M, the C295 tactical transporter, the new-generation A330 Multi Role Tanker Transport and the Eurofighter, the most modern swing-role fighter ever conceived.

Airbus Group’s long-term earnings growth rate is pegged at 12.4%. The company boasts a four-quarter average earnings surprise of 53.85%.

Textron’s military aircraft includes the Beechcraft T-6 training aircraft and the Beechcraft AT-6 light attack aircraft. The company also manufactures the Beechcraft Model 18 light bomber, the T-44 and T-34 training aircraft, and the T-1A jet trainer.

Textron boasts a long-term earnings growth rate of 12.5%. The Zacks Consensus Estimate for TXT’s 2022 sales indicates year-over-year growth of 6.5% from the prior year reported figure.

Price Movement

In the past year, shares of Lockheed Martin have gained 19.8% against the industry’s fall of 33.3%.

Zacks Investment Research
Zacks Investment Research


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Zacks Rank

Lockheed Martin currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
 
Textron Inc. (TXT) : Free Stock Analysis Report
 
Airbus Group (EADSY) : Free Stock Analysis Report
 
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