Lockheed (LMT) wins $870 million contract to modify F-35 aircraft

Lockheed Martin Corporation.com’s LMT business unit, Aeronautics, was recently awarded a modification contract for the F-35A, F-35B and F-35C aircraft. The deal was offered by Naval Air Systems Command, Patuxent River, MD.

Agreement details

Worth $869.9 million, the contract is expected to be completed by December 2026. Under the terms of the agreement, Lockheed will integrate mission and weapons systems capability development, including hardware from flight testing, through a functional review of the system to complete development testing on the F-35 aircraft.
The majority of work related to this agreement will be performed in Fort Worth, TX.

Benefits of the deal

Supported by an international team of leading aerospace majors, the F-35 benefits from a strong global presence, with the program having eight international partners, including Italy, Australia, Norway, Denmark and Canada. The company now has eight foreign military customers who purchase and operate the F-35: Israel, Japan, South Korea, Poland, Belgium, Singapore, Switzerland and Finland. This reflects the huge demand enjoyed by this jet program worldwide.

As a result, Lockheed is seeing a steady influx of contracts for production, delivery of associated spare parts, and other agreements related to the F-35 aircraft program. Such contract wins, including the latest, are expected to boost Lockheed Martin’s revenue in the days ahead.

Growth prospects

According to a report by Research and Markets, the global combat aircraft market is expected to grow at a CAGR of 4% during the period 2020-2025. Such growth can be attributed to an increase in global threats and geopolitical instabilities and an increase in defense spending. These projections should benefit Lockheed as well as other fighter aircraft manufacturers like Northrop Grumman NOC, Boeing BA and textron SMS.

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

Northrop Grumman reported fourth-quarter 2021 adjusted earnings of $6 per share, which beat Zacks’ consensus estimate of $5.95 by 0.8%. NOC’s stock has gained 53.3% over the past year.

Major products in Boeing’s Defense, Space and Security segment include fixed-wing military aircraft, the 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 Q4 2021 grew to $377.50 billion from $363.40 billion at the end of 2020. BA stock shows long-term earnings growth rate of 4 %.

Textron’s business unit, Textron Aviation Defense, designs, builds and supports world-class, multi-role military aircraft preferred for training and attack missions. Some of Textron’s renowned products include the Beechcraft T-6C trainer and the 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 36.6% over the past year.

Price Movement and Zacks Ranking

Lockheed Martin shares have gained 34.1% over the past year against a 27.9% decline in the industry.

Image source: Zacks Investment Research

Lockheed currently carries a Zacks Rank #3 (Hold). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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