Lockheed Martin Corp.’s LMT Aeronautics business division recently won a $16 million contract in relation to the F-35 Lightning II Joint Strike Fighter Air Systems program. This deal will cater to the U.S. Air Force, Navy and non-Department of Defense (DoD) participants.
Details of the Deal
Per the deal, Lockheed Martin will procure support to manage diminishing manufacturing sources related to the F-35 program.
Work related to the deal will be performed in Fort Worth, TX and is expected to be concluded by June 2020.
The contract was awarded by the Naval Air Systems Command, Patuxent River, MD.
Rise in Demand Benefits F-35 Program
Rising security threat from terrorist activities and adverse geopolitical situations have increased the need for enhancing the nation's defense budget, a major portion of which is allocated to combat aircraft. The F-35 program has been supported by an international team of leading aerospace majors. Notably, Northrop Grumman NOC rendered its expertise in carrier aircraft and low-observable stealth technology to this program.BAE Systems’ BAESY short takeoff and vertical landing experience, and air systems sustainment supported the jet’s combat capabilities.
These features have enabled F-35 jet to dominate the combat aircraft market buoyed by solid demand as evident from the program’s frequent contract wins, both from Pentagon and other U.S. allies. For instance, this January, Lockheed clinched a reimbursable contract worth $1.93 billion for providing a consortium of services involving the F-35 program.
Notably, the company’s Aeronautics unit witnessed 14% annual top-line growth in the first quarter, with the F-35 program being a prime contributor and 22 F-35 jets being delivered during the quarter. Considering the latest contract wins and a handful of others in the recent time, we may expect this business segment to deliver impressive performance in the coming days.
Production of F-35 jets is expected to continue for many years ahead, given the U.S. government's current inventory target of 2,456 aircraft for the Air Force, Marine Corps and Navy. Consequently, we expect Lockheed Martin to witness more order inflows for F-35, which in turn should bolster this defense contractor’s top line.
Lockheed Martin’s stock has gained 12.6% in the past year against the industry’s decline of 28.7%.
Lockheed Martin currently carries a Zacks Rank #3 (Hold). A better ranked stock in the same sector is Elbit Systems Ltd ESLT, which carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Elbit Systems’ 2020 earnings, pegged at $7.65 per share, implies a 12.7% improvement on a year-over-year basis. It delivered a positive earnings surprise of 11.26% in the last reported quarter.
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