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Lockheed (LMT) Secures Contract to Aid F-16 Jet Program

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Lockheed Martin Corporation’s (LMT - Free Report) business unit, Aeronautics, recently clinched a contract for its F-16 aircraft program. The award has been provided by the Air Force Life Cycle Management Center, Hill Air Force Base, UT.

Details of the Deal

Valued at $33.8 million, the contract is expected to be completed by Feb 28, 2025. Per the terms of this deal, Lockheed will provide engineering and technical services, support and sustainment, configuration management and programmatic support for the F-16 Weapon System. These efforts will ensure system integrity, mission readiness, sustainability, reliability, and maintainability of the F-16 Weapon System.

The work related to this deal will be executed in Fort Worth, TX. This contract includes foreign military sales to Bahrain, Belgium, Chile, Bulgaria, Denmark, Portugal, Egypt, Greece, Iraq, Israel, Jordan, Korea, Morocco, Netherlands, Norway, Oman, Pakistan, Poland, Romania, Singapore, Slovakia, Taiwan, Thailand and Turkey.

What’s Favoring Lockheed?

As nations across the globe strengthen their defense structures, spending on military arms and ammunition that boast technologically advanced features continues to increase manifold. This also includes increased investments in fighter aircraft and its associated weapon systems.

With increasing investments in combat jets and associated upgrades, the growth opportunities for the combat aircraft market remain solid. To this end, per a Mordor Intelligence report, the global fighter aircraft market is expected to witness a CAGR of 3.72% during 2024-2029.

In this regard, it is imperative to mention that Lockheed Martin, a prominent combat aircraft manufacturer in the United States, enjoys a dominant position in the combat aircraft market.  Apart from the F-16, the company’s extensive product portfolio includes the F-35 Lightning II, C-130 Hercules, F-22 Raptor and many more.

In particular, LMT’s F-16 Fighting Falcon, a combat-proven multi-role fighter jet, enjoys a solid presence in the combat aircraft market. Evidently, more than 3,100 F-16s are operational in 25 countries, with around 19.5 million flight hours.

Impressively, the current backlog of the F-16 Block 70 program includes 133 aircraft for six countries. Looking further ahead, Lockheed expects a demand for up to 300 additional F-16 jets globally. This reflects heightened demand for associated F-16 weapon systems as well, which should usher in more contract wins for Lockheed, like the latest one, in the near future.

Peer Opportunities

A few other defense players that can gain from the expanding fighter aircraft market are Textron (TXT - Free Report) , Boeing (BA - Free Report) and Northrop Grumman (NOC - Free Report) .   

Textron’s unit Textron Aviation is engaged in the production of fighter aircraft like the Beechcraft T-6 training aircraft and the Beechcraft AT-6 light-attack aircraft. The company also manufactures the Beechcraft Model 18 light bomber, the T-44 and T-34 training aircraft and the T-1A jet trainer.

TXT boasts a long-term (three-to-five years) earnings growth rate of 10.1%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 7% from that reported in 2023.

Boeing’s Defense, Space & Security segment is engaged in the development, production and modification of a range of combat-proven aircraft like the F/A-18 Super Hornet, P-8, C-17 Globemaster III, EA-18G and a few more. In 2023, Boeing delivered 22 F/A-18s, nine F-15s, three T-7A Red Hawks and 11 P-8 models.

BA boasts a long-term earnings growth rate of 4%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 12% from that reported in 2023.

Northrop Grumman has been a pioneer in the development of fighter aircraft since its inception. 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. The significant awards in 2023 won by NOC included $2.1 billion for F-35 programs, $1.7 billion for E-2 and $1.5 billion for Triton.

NOC boasts a long-term earnings growth rate of 10.1%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 4.6% from that reported in 2023.

Price Performance

In the past month, shares of LMT have gained 4.8% compared with the industry’s 2.8% rise.

Zacks Investment Research
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Zacks Rank

Lockheed Martin currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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