Lockheed Martin Corporation’s LMT business unit, Aeronautics, recently clinched a modification contract involving its F-35 fighter jet program. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.
Details of LMT’s Deal
Valued at $11.76 billion, the contract is expected to be completed by June 2027. Per the terms of the deal, Lockheed Martin will produce and deliver 145 F-35 jets, which will include all three variants of the F-35 aircraft program. LMT will also provide tooling support for the governments of Italy as well as Japan’s final assembly and check-out facilities.
The contract will serve the U.S. Navy, Air Force, Marine Corps and F-35 cooperative program partners. A major portion of the work related to this deal will be executed in Fort Worth, TX.
What’s Favoring LMT Stock?
With nations globally bolstering defense capabilities, spending on advanced military arms, including fighter jets essential for air warfare, has surged. This trend has been favoring Lockheed Martin, a leading combat aircraft manufacturer, through consistent orders from the Pentagon and U.S. allies.
Notably, Lockheed Martin’s F-35, the most lethal fifth-generation fighter jet, excels in mission readiness. Featuring advanced sensors and communication systems, it securely connects and shares information across air, land, sea, space and cyber domains.
Such remarkable features are likely to have been boosting the demand for this jet, which can be further gauged from the fact that Lockheed Martin had delivered 1,040 F-35 airplanes as of Sept. 30, 2024, since its inception. The latest contract win bears yet another testament to the solid demand that the F-35 jets enjoy in the combat jet market.
Growth Prospects for LMT
Rising military conflicts, terrorism and border disputes, along with rapid technological advancements in combat jets, have led nations to increase their defense spending on combat-proven jets, which constitute an integral part of their defense structure.
This is likely to have prompted the Mordor Intelligence firm to forecast a compound annual growth rate of 3.7% for the global fighter aircraft market during the 2024-2029 time period.
Such strong market prospects drive growth opportunities for Lockheed Martin, backed by its robust portfolio of combat jets, including the F-16, F-22 and F-21 aircraft, in addition to the F-35 jet.
Opportunities for Other Defense Stocks
Other defense companies that are likely to benefit from the expanding global fighter aircraft market are discussed below.
Northrop Grumman Corporation NOC: It is a leading provider of manned and unmanned air systems. It builds some of the world’s most advanced aircraft like the E-2C Hawkeye 2000, A-10 Thunderbolt II, F-5 Tiger Fighter Jet and many more.
Northrop has a long-term (three to five years) earnings growth rate of 19.1%. The Zacks Consensus Estimate for NOC’s 2024 sales indicates year-over-year growth of 5.3%.
Embraer ERJ: The company offers a comprehensive portfolio of the most advanced aircraft in the combat market, which includes the A-29 Super Tucano light attack and advanced trainer and the C-390 Millennium military multi-mission aircraft.
The Zacks Consensus Estimate for ERJ’s 2024 sales indicates year-over-year growth of 18.6%. The consensus estimate for 2024 earnings per share indicates year-over-year growth of 379.1%.
The Boeing Company BA: Its Defense, Space & Security segment engages in the research, development, production and modification of manned and unmanned military aircraft. BA’s product portfolio includes 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.
Boeing has a long-term earnings growth rate of 19.3%. The Zacks Consensus Estimate for BA’s 2025 sales indicates year-over-year growth of 22.5%.
LMT Stock’s Price Movement
Shares of LMT have gained 5.1% in the past six months against the industry’s 1.7% decline.
Image Source: Zacks Investment Research
LMT’s Zacks Rank
LMT 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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