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Lockheed (LMT) Wins $329M Deal to Aid Trident Missile Program

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Lockheed Martin Corp.’s (LMT - Free Report) business unit, Rotary and Mission Systems, recently secured a contract involving the Trident II (D5) missile. The award has been offered by the Strategic Systems Programs, Washington, D.C.

Details of the Deal

Valued at $328.5 million, the contract is projected to be completed by Sep 30, 2026. Per the terms of the deal, Lockheed will provide Strategic Weapon System Trident Fleet support, Trident II Shipboard Integration Increment 8 and navigation subsystem development efforts.

The contract will serve the United States and United Kingdom. The majority of work related to this deal will be executed in Mitchel Field, NY.

What’s Favoring Lockheed Martin?

Lockheed Martin is a prime defense contractor for defense arsenals and ammunition. It enjoys a lucrative position in manufacturing military missiles. In this context, its Trident II (D5) is the latest generation of the U.S. Navy's submarine-launched fleet ballistic missiles, following the highly successful Polaris, Poseidon and Trident I C4 programs.

Trident II (D5) is a three-stage, solid-propellant, inertial-guided ballistic missile developed by Lockheed Martin. The missile can carry multiple independently targeted reentry bodies for a maximum range of more than 7,360 km. The missile cannot be tracked when it is being operated as it has a sea-based deterrent.

Such remarkable features must have boosted its demand in the military landscape. Its strong demand can be gauged from 14 U.S. Navy Ohio-class submarines with American warheads and four Royal Navy Vanguard-class submarines with British warheads equipped with this missile. The latest contract win is a bright example of the solid demand that the Trident missile enjoys in the defense market.

Per a report from Mordor Intelligence, the missiles and missile defense system market is anticipated to witness a CAGR of 4.9% during the 2022-2027 period. Such an expanding market size is likely to benefit LMT as it enjoys a solid position in the military missile market.

Peer Growth

Prominent defense majors that have been manufacturing missiles for the defense industry and are likely to enjoy the perks of increased demand are as follows:

Northrop Grumman (NOC - Free Report) is a prominent developer of missile systems and counter systems, including strategic deterrents, subsystems and components. To strengthen its position in the missile market, Northrop acquired Orbital ATK in 2018, which used to be one of the industry leaders in providing missile components across air, sea and land-based systems.

Northrop Grumman has a long-term earnings growth rate of 3.3%. NOC’s investors have gained 40.2% in the past year.

Raytheon Technologies’ (RTX - Free Report) Missiles & Defense is a leading designer, developer, integrator, producer and sustainer of integrated air and missile defense systems. The unit serves as a prime contractor or major subcontractor on numerous missiles and related programs with the U.S. Department of Defense.

Raytheon’s long-term earnings growth rate is pegged at 9.5%. Shares of RTX have returned 16.5% value to its investors in the past year.

General Dynamics’ (GD - Free Report) Ordnance and Tactical Systems is the system integrator of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases and launches tubes for tactical and strategic missiles.

General Dynamics boasts a long-term earnings growth rate of 9.3%. GD shares have returned 21.4% in the past year.

Price Movement

In the past year, shares of Lockheed Martin have rallied 40% against the industry’s decline of 3.6%.

Zacks Investment Research
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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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