Lockheed (LMT) Wins $7.6B Deal to Procure 129 F-35 Aircraft

·4 min read

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

Details of the Deal

Valued at $7.63 billion, this contract is expected to get completed by October 2024. Per the terms of the agreement, Lockheed will procure a total of 129 F-35 aircraft, ranging from F-35A to F-35C variations. The company will also provide 69 shipsets of technical hardware.

The contract will serve the U.S. Air Force, Navy, Marine Corps, non-U.S Department of Defense (DOD) participants as well as Foreign Military Sales customers.

A major portion of the agreement will be executed in Fort Worth, TX.

Importance of F-35 for LMT

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.

Lockheed expects to make deliveries of this stealth aircraft in the range of 147-153 jets per year in 2023 and 2024, and 156 thereafter in 2025 and beyond. This, in turn, should bolster LMT’s revenues significantly 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 23.4% against the industry’s fall of 14.4%.

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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
 
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