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Lockheed Martin (LMT) Wins Deal for Trident II (D5) Missile

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Lockheed Martin Corporation (LMT - Free Report) recently clinched a modification contract involving the Trident II (D5) missile. The Strategic Systems Programs, Washington, D.C. awarded the deal.

Details of the Deal

Valued at $49.9 million, this contract includes production and deployed systems support for the Trident II (D5) missile. The work related to this deal will be carried out at multiple locations across the United States, with the majority in Camden, AR.

The work is scheduled to be completed by Sep 30, 2027. This contract award also benefits a foreign military sale to the United Kingdom.

What’s Favoring Lockheed Martin?

Lockheed Martin is a prime defense contractor for defense arsenals and ammunition. It enjoys a lucrative position in manufacturing military missiles. In this context, its Trident II (D5) is the latest generation of the U.S. Navy's submarine-launched fleet ballistic missiles, following the highly successful Polaris, Poseidon and Trident I C4 programs.

Trident II (D5) is a three-stage, solid-propellant, inertial-guided ballistic missile developed by Lockheed Martin. The missile can carry multiple independently targeted reentry bodies for a maximum range of more than 7,360 km. The missile cannot be tracked when it is being operated as it has a sea-based deterrent.

Such remarkable features have aided its demand in the military landscape. Its strong demand can be gauged from 14 U.S. Navy Ohio-class submarines with American warheads and four Royal Navy Vanguard-class submarines with British warheads equipped with this missile.

Per the report from Mordor Intelligence, the missiles and missile defense system market is anticipated to witness a CAGR of 4.9% during the 2022-2027 period. Such an expanding market size is likely to benefit LMT as it enjoys a solid position in the military missile market.

Peer Growth

Prominent defense majors that have been manufacturing missiles for the defense industry and are likely to enjoy the perks of the increased demand are as follows:

Northrop Grumman (NOC - Free Report) is a prominent developer of missile systems and counter systems, including strategic deterrents, subsystems and components. To strengthen its position in the missile market, Northrop had acquired Orbital ATK in 2018, which used to be one of the industry leaders in providing missile components across air, sea and land-based systems.

Northrop Grumman has a long-term (three to five years) earnings growth rate of 2.9%. NOC’s investors have gained 51.6% in the past year.

Raytheon Technologies’ (RTX - Free Report) Missiles & Defense is a leading designer, developer, integrator, producer and sustainer of integrated air and missile defense systems. The unit serves as a prime contractor or major subcontractor on numerous missiles and related programs with the U.S. Department of Defense.

Raytheon’s long-term earnings growth rate is pegged at 9.5%. Shares of RTX have returned 20.4% value to its investors in the past year.

General Dynamics’ (GD - Free Report) Ordnance and Tactical Systems is the system integrator of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases and launches tubes for tactical and strategic missiles.

General Dynamics boasts a long-term earnings growth rate of 9.3%. GD shares have returned 32.9% in the past year.

Price Movement

In the past year, shares of Lockheed Martin have rallied 45.2% compared to the industry’s decline of 1.4%.

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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