We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Lockheed Martin (LMT) Unit Wins $258M Deal to Offer F-35s
Read MoreHide Full Article
Lockheed Martin Corp.'s (LMT - Free Report) Aeronautics business division has won a modification contract to offer low-rate initial production of the 10th lot of F-35 Lightening II Joint Strike Fighter.
Contract Details
The contract is valued at $257.8 million and has been awarded by the Naval Air Systems Command, Patuxent River, MD.
Per the modification, Lockheed Martin will support the F-35 Joint Strike Fighter production by procuring 129 alternate mission equipment. Additionally, the company will provide 94 red gear − 44 for the Air Force; 11 for the Navy and Marine Corps; 39 for foreign military sales (FMS) and international partners. The contract includes procurement of 468 pilot flight equipment − 203 for the Air Force; 131 for Navy and Marine Corps; and 134 for FMS and international partners as well.
The modification includes 47.7% of the purchases for the Air Force; 15.6% for Marine Corps; 4% for the Navy; 23.4% for international partners; and 9.3% for FMS customers under the FMS program.
The work is scheduled to be completed by Jun 2020. Majority of the work related to this contract will be carried out in Inglewood, CA; while the rest will be performed in multiple locations across the U.S. The contract will use fiscal 2016 aircraft procurement (Air Force, Navy, Marine Corps); international partner; and FMS funds.
F-35 Attributes
Lockheed Martin’s F-35 Lightning II is a single-seat, single-engine 5th Generation fighter aircraft, which comes with an advanced stealth feature combined with enhanced fighter speed and agility, fully fused sensor information, network-enabled operations and advanced sustainment. Currently, three variants of F-35 are set to replace five fighter jets for the U.S. Air Force, Navy and Marine Corps as well as a variety of fighter jets for at least ten other countries.
Notably, the F-35 program has been supported by an international team of leading aerospace majors with Lockheed Martin being the primary partner. Evidently, Northrop Grumman Corp. (NOC - Free Report) contributed its expertise in carrier aircraft and low-observable stealth technology to this program, BAE Systems plc’s (BAESY - Free Report) short takeoff and vertical landing experience, and air systems sustainment supported the jet’s combat capabilities. Moreover, Pratt & Whitney, a unit of United Technologies Corporation , provided F-35s with the F135 propulsion system, which is the world's most powerful fighter engine.
Our View
We remind investors that despite offering superior air security and stability, the F-35 program has been facing some engine-related technical issues for the last few years and has been repeatedly criticized by President Trump on being an overtly expensive project. In this context, Lockheed Martin finally signed a $8.5 billion deal with Pentagon this February with the intent of delivering 90 F-35s of the 10th Lot at a historically low rate either forced by Trump’s intervention or to keep management’s earlier promise to cut down cost by 6–7%,
To be specific, the 10th Lot represented a reduction of $728 million in costs compared with the 9th Lot’s production. Going ahead, Lockheed Martin's management is likely to adopt a cost-saving initiative to lower sustainment costs for F-35 by 10%, over the next couple of years. This, in turn, will result in cost savings of $1 billion over a five-year period. In fact, we believe the recent contract win will enable the company to take a step toward achieving its goal and allow it to provide more of these combat aircraft at an efficiently reduced rate.
Furthermore, with the U.S. government expecting to spend approximately $400 billion in the upcoming decades to develop and purchase 2,443 F-35 jets, and Lockheed Martin trying its best to effectively reduce the price of this program, the government may place larger orders. This, in turn, will boost the company’s profits in the near term.
Price Movement
Lockheed Martin's stock was up about 12.8% in the last one year, underperforming the Zacks categorized Aerospace/Defense industry's gain of 25.6%. This could be because the earlier budget cuts have put pressure on the top line although the present defense budget is more in favor of the sector. Also, budget deficits and political uncertainty make future defense budgets vulnerable to cutbacks.
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Lockheed Martin (LMT) Unit Wins $258M Deal to Offer F-35s
Lockheed Martin Corp.'s (LMT - Free Report) Aeronautics business division has won a modification contract to offer low-rate initial production of the 10th lot of F-35 Lightening II Joint Strike Fighter.
Contract Details
The contract is valued at $257.8 million and has been awarded by the Naval Air Systems Command, Patuxent River, MD.
Per the modification, Lockheed Martin will support the F-35 Joint Strike Fighter production by procuring 129 alternate mission equipment. Additionally, the company will provide 94 red gear − 44 for the Air Force; 11 for the Navy and Marine Corps; 39 for foreign military sales (FMS) and international partners. The contract includes procurement of 468 pilot flight equipment − 203 for the Air Force; 131 for Navy and Marine Corps; and 134 for FMS and international partners as well.
The modification includes 47.7% of the purchases for the Air Force; 15.6% for Marine Corps; 4% for the Navy; 23.4% for international partners; and 9.3% for FMS customers under the FMS program.
The work is scheduled to be completed by Jun 2020. Majority of the work related to this contract will be carried out in Inglewood, CA; while the rest will be performed in multiple locations across the U.S. The contract will use fiscal 2016 aircraft procurement (Air Force, Navy, Marine Corps); international partner; and FMS funds.
F-35 Attributes
Lockheed Martin’s F-35 Lightning II is a single-seat, single-engine 5th Generation fighter aircraft, which comes with an advanced stealth feature combined with enhanced fighter speed and agility, fully fused sensor information, network-enabled operations and advanced sustainment. Currently, three variants of F-35 are set to replace five fighter jets for the U.S. Air Force, Navy and Marine Corps as well as a variety of fighter jets for at least ten other countries.
Notably, the F-35 program has been supported by an international team of leading aerospace majors with Lockheed Martin being the primary partner. Evidently, Northrop Grumman Corp. (NOC - Free Report) contributed its expertise in carrier aircraft and low-observable stealth technology to this program, BAE Systems plc’s (BAESY - Free Report) short takeoff and vertical landing experience, and air systems sustainment supported the jet’s combat capabilities. Moreover, Pratt & Whitney, a unit of United Technologies Corporation , provided F-35s with the F135 propulsion system, which is the world's most powerful fighter engine.
Our View
We remind investors that despite offering superior air security and stability, the F-35 program has been facing some engine-related technical issues for the last few years and has been repeatedly criticized by President Trump on being an overtly expensive project. In this context, Lockheed Martin finally signed a $8.5 billion deal with Pentagon this February with the intent of delivering 90 F-35s of the 10th Lot at a historically low rate either forced by Trump’s intervention or to keep management’s earlier promise to cut down cost by 6–7%,
To be specific, the 10th Lot represented a reduction of $728 million in costs compared with the 9th Lot’s production. Going ahead, Lockheed Martin's management is likely to adopt a cost-saving initiative to lower sustainment costs for F-35 by 10%, over the next couple of years. This, in turn, will result in cost savings of $1 billion over a five-year period. In fact, we believe the recent contract win will enable the company to take a step toward achieving its goal and allow it to provide more of these combat aircraft at an efficiently reduced rate.
Furthermore, with the U.S. government expecting to spend approximately $400 billion in the upcoming decades to develop and purchase 2,443 F-35 jets, and Lockheed Martin trying its best to effectively reduce the price of this program, the government may place larger orders. This, in turn, will boost the company’s profits in the near term.
Price Movement
Lockheed Martin's stock was up about 12.8% in the last one year, underperforming the Zacks categorized Aerospace/Defense industry's gain of 25.6%. This could be because the earlier budget cuts have put pressure on the top line although the present defense budget is more in favor of the sector. Also, budget deficits and political uncertainty make future defense budgets vulnerable to cutbacks.
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
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>