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Lockheed (LMT) Wins $167M Deal to Support F-35 Jets Program

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Lockheed Martin Corp. (LMT - Free Report) recently secured a modification contract involving the F-35 Lightning II Joint Strike Fighter Jet Program. The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD.  

Details of the Deal

Valued at $166.6 million, the contract is expected to be completed by December 2027. Per the terms of the deal, Lockheed will procure, deliver, install and configure 22 training devices for F-35 jets.

Through the latest modification, Lockheed will also offer non-recurring engineering to identify and integrate a replacement rechargeable battery module to be installed within the blade server system of pilot training devices.

Most of the work related to this contract will be carried out in Orlando, FL. The deal will serve the U.S. Air Force, Marine Corps, Navy, non-U.S. Department of Defense (DOD) participants and Foreign Military Sales (FMS) customers.

Growing Importance of F-35 Worldwide

The F-35 program enjoys a solid demand worldwide, evident by its eight international program partners — the United States, the U.K., Italy, the Netherlands, Australia, Norway, Denmark and Canada. This January, the company revealed that two more countries, Switzerland and Finland, have been added to its existing six Foreign Military Sales customers in 2021 to procure and operate the F-35 jet. This reflects the growing importance of this family of jets globally.
 
As a result, Lockheed enjoys a consistent inflow of contracts for the production, delivery of associated spare parts and other deals concerning the F-35 jet program. Such contract wins, including the latest one, are expected to boost Lockheed Martin's top line in the days ahead.

Growth Prospects

Per a Research and Markets report, the global combat aircraft market is expected to witness a CAGR of 4% during the 2020-2025 time period. Such growth can be attributed to a rise in global threats and geopolitical instabilities and increased spending on defense. These projections should benefit Lockheed along with other combat jet manufacturers like Northrop Grumman (NOC - Free Report) , Boeing (BA - Free Report) and Textron (TXT - Free Report) .

Since its inception, Northrop Grumman has been a pioneer in the development of manned aircraft for combat. NOC also has a tradition of providing technological leadership in all aspects of military aviation and aircraft, such as manned, unmanned, targeting, surveillance and aircraft self-protection systems that enable warfighters to accomplish missions anytime, anywhere and under any conditions.

Northrop Grumman reported fourth-quarter 2021 adjusted earnings of $6 per share, which surpassed the Zacks Consensus Estimate of $5.95 by 0.8%. NOC stock has gained 49.4% in the past year.

Boeing’s Defense, Space & Security segment’s primary products include fixed-wing military aircraft, F/A-18E/F Super Hornet, F-15 programs, P-8 programs, KC-46A Tanker and T-7A Red Hawk. The segment also produces rotorcraft and rotary-wing programs such as CH-47 Chinook, AH-64 Apache and V-22 Osprey.

Boeing’s backlog at the end of fourth-quarter 2021 increased to $377.50 billion from $363.40 billion at the end of 2020. BA stock boasts a long-term earnings growth rate of 4%.

Textron’s business unit, Textron Aviation Defense, designs, builds and supports versatile and globally-known military aircraft preferred for training and attack missions. Some of Textron’s renowned products include Beechcraft T-6C trainer and AT-6 Wolverine.

Textron reported adjusted earnings of $3.30 per share in 2021, up from 2020 earnings of $2.07 per share. TXT stock has gained 44.7% in the past year.

Price Movement and Zacks Rank

Shares of Lockheed Martin have gained 31.5% in the past year against the industry's decline of 27.2%.

Zacks Investment Research
Image Source: Zacks Investment Research

 

Lockheed 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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