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Lockheed Martin (LMT) Wins $492.7M Modification Contract

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Lockheed Martin Corporation’s (LMT - Free Report) business unit, Aeronautics, recently inked a modification contract to provide logistics support activities to F-35 Lightning II Joint Strike Fighter jets. The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD.  

Details of the Deal

Valued at $492.7 million, the contract is expected to be completed by December 2022. The latest modification deal includes support services like ground maintenance activities, action request solutions, depot activities, automatic logistics information system operation and maintenance, reliability and maintainability. The services also involve supply-chain management, pilot training, maintainer training and training system sustainment in support of the delivered F-35 Lightning II Joint Strike Fighter aircraft.

The contract will serve the U.S. Navy, Marine Corps, Air Force, Foreign Military Sales customers and non-U.S. Department of Defense participants. The majority of the work related to this deal will be executed in Fort Worth, TX.

Importance of F-35 Worldwide

The growing importance of the F-35 family of aircraft can be gauged from its worldwide recognition as evident by its eight international program partners — the United States, the United Kingdom, Italy, the Netherlands, Australia, Norway, Denmark and Canada.

The stealth aircraft has six Foreign Military Sales customers procuring and operating the F-35, namely Israel, Japan, South Korea, Poland, Belgium and Singapore. This reflects F-35’s dominancy in the military aircraft arena.

Due to its remarkable features, which are well suited for any military mission, Lockheed Martin continues to witness a steady inflow of orders involving the aircraft. The latest contract win is a testament to that.

Looking ahead, the long-term growth trajectory of F-35 jets remains compelling. LMT anticipates the delivery of the aircraft to increase to 156 by 2023 from 90 as of September 2021. This, in turn, should bolster Lockheed’s future top line.

Growth Prospects

Nations across the globe have increased their defense spending on military equipment and various arsenals to strengthen their defense capabilities. The surge in demand for defense products is primarily due to rising geo-political tensions and amplified terrorist threats. Military aircraft, the integral part of any defense system, have also registered strong growth in demand.

Per Mordor Intelligence projections, the global military aircraft market is expected to witness a CAGR of more than 4.5% over the period through 2026. Such projections further exemplify that Lockheed Martin may continue to book strong order inflows involving the aircraft due to F-35’s worldwide supremacy in the aircraft arena.

It is also imperative to mention that such growth projections will not only benefit Lockheed Martin but also other prominent defense majors, namely Northrop Grumman(NOC - Free Report) , Airbus Group (EADSY - Free Report) and Textron (TXT - Free Report) .

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 8.9%. NOC’s investors have gained 27.3% in the past year.

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.

The Zacks Consensus Estimate for Airbus Group’s 2021 earnings indicates year-over-year growth of 3.9%. Shares of EADSY have returned 14.4% value to its investors in the past year.

Textron’s military aircraft includes the Beechcraft T-6 training aircraft and the Beechcraft AT-6 light attack aircraft. The company also manufactures Beechcraft Model 18 light bomber, the T-44 and T-34 training aircraft and the T-1A jet trainer.

The Zacks Consensus Estimate for Textron’s 2021 earnings has been revised upward by 1.5% to $3.33 in the past 60 days. TXT stock has appreciated 59.3% in the past year.

Price Movement

In the past year, shares of Lockheed Martin have declined 0.2% compared with the industry’s fall of 30.2%.

Zacks Investment ResearchImage 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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