Back to top

Image: Bigstock

Lockheed Martin Secures $997M Deal for Upgrading F-16 Jets

Read MoreHide Full Article

Lockheed Martin Corp. (LMT - Free Report) recently secured a $996.8-million foreign military sales (FMS) contract for upgrading 84 F-16 jets to the V-configuration. On completion, these jets will be delivered to Greece.

The contract was awarded by the Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, Ohio. Work related to the deal will be executed in Fort Worth, TX and Athens, Greece. Lockheed Martin expects to
complete the task by Jun 30, 2027.

A Brief Note on F-16V Jets

Originally manufactured by General Dynamics (GD - Free Report) , F-16 became part of Lockheed Martin after it acquired the former’s aircraft manufacturing business. The combat-proven F-16 falcon is a multi-role fighter jet, which currently serves 28 nations. As the F-16 Original Equipment Manufacturer (OEM), Lockheed Martin is uniquely qualified to design, engineer, develop, integrate and sustain a complete F-16 weapons system to meet customer requirements.

F-16V, the latest F-16 configuration, includes numerous enhancements designed to keep the F-16 at the forefront of international security. Its F-16V configuration provides relevant combat capabilities in a scalable and affordable package. The core of the F-16V configuration is an Active Electronically Scanned Array (AESA) radar, a modern commercial off-the-shelf (COTS)-based avionics subsystem.

What Favors Lockheed Martin?

Lockheed Martin’s partnership with Greece has spanned more than 70 years now and the company has successfully partnered with the country for numerous military programs, including the F-16 jets, C-130 Hercules and P-3 Orion. The latest order coming in from the Greek government will not only strengthen the relationship further, but also enable Lockheed Martin to expand its market in the region.

Thanks to its widely renowned aircraft programs, the company’s Aeronautics unit enjoys a steady flow of contracts from the Pentagon, which, in turn, boosts this segment’s top line. Evidently, in the third quarter of 2018, the Aeronautics business segment generated sales of $5.64 billion, reflecting 19.6% improvement year over year. This sales growth was partially driven by higher volume of modernization contracts for the F-16 jets. Considering this, we may expect the latest contract win to boost this unit in a similar manner.

Furthermore, the fiscal 2019 defense budget provisions for a spending plan of $21.7 billion on U.S. aircraft. Such budgetary developments reflect solid growth prospects for Lockheed Martin’s various aircraft program, which, in turn, are likely to boost the company’s profit margin.

Price Movement

Lockheed Martin’s stock has decreased 16.4% in the past year compared with the industry’s decline of 6.5%. The underperformance may have been caused by the intense competition the company faces in the aerospace-defense space for its broad portfolio of products and services, both domestically and internationally.



Zacks Rank & Other Key Picks

Lockheed Martin currently carries a Zacks Rank #2 (Buy).

A few top-ranked companies in the same sector are Aerojet Rocketdyne Holdings and Teledyne Technologies Incorporated (TDY - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet Rocketdyne came up with average positive earnings surprise of 19.27% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 43.3% to $1.82 in the past 90 days.

Teledyne Technologies came up with average positive earnings surprise of 12.92% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 6% to $8.75 in the past 90 days.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Published in