Lockheed Martin Corporation’s LMT Aeronautics business segment recently clinched a modification contract to support the F-35 Joint Strike Fighter aircraft program. The award has been provided by the Naval Air Systems Command, Patuxent River, MD.
Details of the Lockheed Martin Deal
Valued at $678.4 million, the contract is expected to be completed by December 2028. Per the terms of the deal, Lockheed will provide various material modification kits, special test and tooling equipment, and associated seed assets to support the F-35 Joint Strike Fighter aircraft.
The contract will serve the U.S. Navy, Air Force, Marine Corps and non-Department of Defense participants. The work related to this deal will be executed in Fort Worth, TX.
Importance of LMT’s F-35 Jets
The F-35 program is widely recognized as the most advanced 5th-generation fighter jet, offering unmatched mission readiness. With cutting-edge sensors and communication systems, the F-35 is designed to operate seamlessly across multiple domains.
These exceptional features must have been driving significant demand for the F-35 jets. This jet program’s demand trend can be gauged from the fact that since its launch, Lockheed has delivered 1,040 units as of Sept. 29, 2024.
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 5.2% for the global military aviation market during the 2024-2030 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. Lockheed Martin’s total backlog was $165.69 billion as of Sept. 29, 2024.
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: Northrop provides 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%. The Zacks Consensus Estimate for NOC’s 2025 sales indicates year-over-year growth of 3.4%.
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 2025 sales indicates year-over-year growth of 18.3%. The company delivered an average earnings surprise of 127.28% in the last four quarters.
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 21.9%.
LMT Stock Price Movement
Shares of LMT have risen 2.9% in the past six months against the industry’s 1% 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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