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Lockheed Martin Clinches $1.2B FMS Deal for Korea's F-16

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Defense prime Lockheed Martin Corp.’s (LMT - Free Report) Aeronautics business division has secured a foreign military sales (FMS) contract for upgrading Korean F-16 fighter jets. This deal comes from a sole-source acquisition.

Valued at $1.2 billion, this contract was awarded by the Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, OH. Work related to this deal will be carried out at Fort Worth, TX and is scheduled to be over by Nov 15, 2025.

A Brief Note on F-16

Originally manufactured by General Dynamics Corp. (GD - Free Report) , F-16 became part of Lockheed Martin after it acquired the former’s aircraft manufacturing business. The combat-proven F-16 falcon is a multi-role fighter jet, which currently serves 28 nations. As an F-16 Original Equipment Manufacturer (OEM), Lockheed Martin is uniquely qualified to design, engineer, develop, integrate and sustain a complete F-16 weapons system to meet customer requirements.

Over the decades, the F-16 falcon has evolved from a day-only lightweight jet to all-weather multi-role fighter. The latest and most advanced version – F-16V – is the 4th generation of the F-16 fleet. Its superiority over the earlier F-16 models lies in its advanced APG-83 AESA radar.

Notably, Northrop Grumman Corp.’s (NOC - Free Report) APG-83 radar provides F-16s with 5th generation fighter radar capabilities, which allow better detection and tracking ranges, multiple target track, high-resolution Synthetic Aperture Radar (SAR) maps for all-environment precision strike, interleaved air-to-air and air-to-surface mode operations for improved situational awareness, operational effectiveness and survivability.

Our View

Lockheed Martin generates a substantial amount of its total sales from international customers. Notably, the company’s primary tactical aircraft F-35 as well as F-16 and C130J jets contribute significantly to the company’s revenues.

A quick look at the company’s recent deal wins reveals three large international upgrade programs, which in turn will help outweigh the expected decline in F-16 production next year, per management. Moreover, the company expects organic growth of 3–5% this year, which will primarily be led by the strength in the Aeronautics segment. We believe these developments along with the aforementioned contract win will further bolster the company’s revenues from Aeronautics division in days to come.

Zacks Rank & Other Key Picks

Lockheed Martin currently carries a Zacks Rank #2 (Buy). Another favorably ranked stock in the aerospace and defense sector is Engility Holdings, Inc. (EGL - Free Report) , with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Engility Holdings has witnessed a 7.8% gain year to date. On an average, the company posted a positive earnings surprise of 23.19% in the trailing four quarters.

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