Back to top

Image: Bigstock

Lockheed Martin (LMT) Wins Deal to Support CH-53K Aircraft

Read MoreHide Full Article

Lockheed Martin Corp.’s (LMT - Free Report) business unit, Sikorsky, recently secured a contract involving CH-53K aircraft. The award has been offered by the Naval Air Warfare Center Training Systems Division, Orlando, FL.

The contract, valued at $32.6 million, is expected to get completed by December 2024. Under the agreement, Lockheed will procure one CH-53K containerized flight training device (2F243-2) based on a low-rate initial production configuration to support CH-53K phase II training system efforts.

Most of the work related to this deal will be carried out in Chantilly, VA.

Importance of CH-53K Helicopter

The CH-53K helicopter specializes in heavy lifting and moving troops and equipment from ship to shore and higher altitude terrains rapidly for expeditionary U.S. Marine Corps and international military missions. It also supports missions like humanitarian aid, troop transport, casualty evacuation, support of special operations forces and combat search and rescue.

Benefits of the Contract

Many countries have reinforced their military resources due to intense geopolitical tensions and increasing terrorist threats.

Among other combat arsenals and weaponries, military helicopters have also been gaining importance owing to advancements and the integration of new tactical and logistical features. This has provided ample opportunities for Lockheed Martin to win production and modification contracts for helicopters recently, including the latest contract.

Such contract wins are likely to drive revenues from the Rotary and Mission Systems business segment, which comprises the Sikorsky helicopters.

Growth Prospects

The United States, which is the largest exporter of military weaponry worldwide, is also strengthening military resources. This is quite evident from the fiscal 2023 budget proposal worth $773 billion put forward by the Biden administration for the Department of Defense, with $56.5 billion planned investments in combat aircraft. The defense budget request reflects a 4.1% increase from the fiscal 2022 enacted amount.

Such solid budgetary provisions should benefit Lockheed along with other defense manufacturers like Northrop Grumman (NOC - Free Report) , Boeing (BA - Free Report) and Textron (TXT - Free Report) , which also have expertise in manufacturing military aircraft.

Since its inception, Northrop Grumman has been a pioneer in developing manned aircraft for combat. Northrop Grumman also has a tradition of providing technical leadership in all aspects of military aviation and aircraft, such as manned, unmanned, targeting, surveillance and aircraft self-protection systems. It also enables warfighters to accomplish missions under any conditions.

NOC stock boasts a long-term earnings growth rate of 6.1%. The Zacks Consensus Estimate for 2022 sales indicates growth of 2.6% from the 2021 reported figure.

Boeing 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. This segment also produces rotorcraft and rotary-wing programs such as CH-47 Chinook, AH-64 Apache and V-22 Osprey.

BA stock boasts a long-term earnings growth rate of 4%. The Zacks Consensus Estimate for 2022 sales suggests growth of 21.8% from the 2021 reported figure.

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.

TXT stock boasts a long-term earnings growth rate of 12.7%. The Zacks Consensus Estimate for 2022 sales suggests growth of 8% from the 2021 reported figure.

Price Movement

In the past year, shares of Lockheed have gained 10.5% against the industry’s 34.2% decline.

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.

Published in