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Lockheed (LMT) Wins Deal to Offer Training for F-16 Jets

Lockheed Martin Corp.’s LMT business segment, Rotary and Mission Systems, recently clinched a contract to provide international training for F-16 jets. The award has been offered by the 338th Enterprise Sourcing Squadron, JBSA-Randolph, San Antonio, TX.

Details of the Deal

Valued at $25 million, the contract is projected to be completed by Mar 21, 2026. This contract will offer F-16 operational capability for countries that have purchased F-16 jets recently.

For nations that had previously purchased and operated F-16 jets, this contract offers aircraft maintenance and pilot training to support ongoing sustainment training or in-country training to aid aircraft upgrade programs.

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This award involves Foreign Military Sales (FMS) to Bahrain.

Importance of the F-16 Jets

Over the past decade, a rapid rise in global terrorism and adverse geopolitical situations across borders have boosted the demand for defense products. Combat aircraft constitute a major portion of this portfolio. It is imperative to mention here that the F-16 Falcon jets have significantly risen in importance on a global scale over the past few years.

Over the past couple of years, the F-16 witnessed significant development, with nations like Taiwan, Bulgaria, Morocco and Bahrain signing agreements to procure new F-16 aircraft. To reap the benefits of the rising demand for F-16, Lockheed Martin introduced F-16 Block 70/72 in 2020, the most advanced F-16 aircraft, combining numerous capabilities and structural upgrades. This model provides a new aircraft structure that lasts 50% longer than the previously produced F-16 aircraft.

Such advancements might have been ushering in contracts from Pentagon and other U.S. allies, like the latest one, thereby boosting Lockheed Martin’s revenue prospects.

Growth Prospects

With rising security threats across the globe, emerging economies like the Asia Pacific, the Middle East and South America are spending a lot on enhancing their defense arsenals. Meanwhile, other nations like Europe and the United States have already been leading the defense market. With the United States being the largest weapons exporter worldwide, the nation has been spending significantly on defense products including combat aircraft.

Lockheed, being a prominent combat aircraft manufacturer in the United States, enjoys a dominant position in the combat aircraft market.

Per a Mordor Intelligence report, the global fighter aircraft market is expected to witness a CAGR of 3.95% during the 2023-2028 period, with North America constituting the largest share of this market. Such growth can be attributed to a rise in global threats and geopolitical instabilities, and increased spending on defense. These projections should benefit Lockheed, along with other U.S.-based combat jet manufacturers like Boeing BA, Northrop Grumman NOC and Textron TXT.

Boeing’s Defense, Space & Security segment engages in the research, development, production and modification of manned and unmanned military aircraft. This segment's primary products include military aircraft like F/A-18E/F Super Hornet, F-15, P-8, KC-46A Tanker and T-7A Red Hawk aircraft.

BA stock has a long-term earnings growth of 4%. The Zacks Consensus Estimate for 2023 sales implies a 22.1% increase from the year-ago reported figure.

Since its inception, Northrop Grumman has been a pioneer in the development of manned combat aircraft. The company also has a tradition of providing technological leadership in all aspects of military aviation and aircraft, such as manned, unmanned, targeting, surveillance and aircraft self-protection systems. This is to help warfighters in accomplishing missions anytime, anywhere and under any conditions.

NOC stock boasts a long-term earnings growth of 3.5%. The Zacks Consensus Estimate for 2023 sales indicates a 4.6% increase from the year-ago reported figure.

Textron’s business unit, Textron Aviation Defense designs, builds and supports versatile and globally known military aircraft, preferred for training and attack missions. Some of Textron’s renowned products include the Beechcraft T-6C trainer and AT-6 Wolverine.

TXT stock boasts a long-term earnings growth of 11.2%. The Zacks Consensus Estimate for 2023 earnings indicates an 8.1% increase from the year-ago reported figure.

Price Movement and Zacks Rank

Shares of Lockheed Martin have gained 4.1% in the past year against the industry's 17.8% decline.

Zacks Investment Research
Zacks Investment Research


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The company 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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The Boeing Company (BA) : Free Stock Analysis Report

Lockheed Martin Corporation (LMT) : Free Stock Analysis Report

Northrop Grumman Corporation (NOC) : Free Stock Analysis Report

Textron Inc. (TXT) : Free Stock Analysis Report

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