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Lockheed (LMT) Unit Wins $632M Deal to Support F-35 Program

Zacks Equity Research
·4-min read

Lockheed Martin Corp.'s LMT business unit, Aeronautics, recently secured a contract to support the F-35 aircraft program. The Naval Air Systems Command, Patuxent River, MD has offered the award.

Details of the Deal

Valued at $632.1 million, the contract is projected to be completed by March 2024. Per the terms, the Aeronautics unit will provide engineering, maintenance, logistics and material support for the consistent development, sustainment and manufacture of software builds for F-35 jets.

This deal also provides unique sea trials on aircraft carriers for the government of the United Kingdom. The majority of the work related to this contract will be executed 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.

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

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The F-35 program remained the largest revenue generator for its Aeronautics business unit and accounted for 68% of Aeronautics net sales in 2021.

Additionally, Lockheed Martin delivered 142 aircraft in 2021 compared with 120 delivered in 2020. The stealth aircraft is likely 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.

Due to the aircraft’s remarkable features, which are well-suited for any military mission, Lockheed Martin continues to witness a steady inflow of orders involving the F-35 jet. This, in turn, should bolster LMT’s military aircraft revenues.

Growth Prospects

Per Mordor Intelligence projections, the global military aircraft market is expected to witness a CAGR of more than 4% over the 2022-2031 period. Such projections exemplify immense opportunities for Lockheed Martin, which is already an established player, to further reap the benefits of the expanding military aircraft market.

Prominent defense majors that are involved in the manufacturing of military aircraft and are poised to enjoy the perks of the military aircraft market’s growth 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 6.1%. The Zacks Consensus Estimate for NOC’s 2022 sales indicates year-over-year growth of 2.7% from the prior-year 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 Zacks Consensus Estimate for EADSY’s 2022 sales indicates year-over-year growth of 7% from the prior-year reported figure.

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 12.7%. The Zacks Consensus Estimate for TXT’s 2022 sales indicates year-over-year growth of 8.2% from the prior-year reported figure.

Price Movement

In the past year, shares of Lockheed Martin have rallied 14.4% against the industry’s fall of 40%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

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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