Lockheed Martin (LMT) Wins $474M Deal for Trident II Missile

·3 min read

Lockheed Martin Corp.’s LMT business segment, Space Systems, recently clinched a modification contract for the Trident II (D5) missile. The deal has been awarded by the Strategic Systems Programs, Washington, D.C.

Details of the Deal

Valued at $474.2 million, the contract is expected to be completed by Sep 30, 2027. Per the deal, Lockheed Martin will provide Trident II (D5) missile production and deployed systems support. A major portion of the work related to this deal will be executed in Magna, Utah.

Significance of Trident II

The Trident II D5 fleet ballistic missile is a program with the U.S. Navy for the only submarine-launched intercontinental ballistic missile currently in production in the United States. It is the latest generation of the U.S. Navy's submarine-launched fleet ballistic missiles, following the highly successful Polaris, Poseidon and Trident I C4 programs.

Lockheed Martin’s Space Systems unit is the prime contractor for the development, production and support equipment of this missile. The company also supplies technical and logistical support at sites where the missile is deployed.

Due to its remarkable features, which are well-suited for any military mission, Lockheed Martin continues to witness a steady inflow of orders involving the Trident missile. The latest contract win is a testament to that. This shall bolster LMT’s revenues from the Space Systems unit.

Growth Prospects

Of late, nations have been increasing their defense spending on military equipment and weaponry to modernize and upgrade defense systems amid rising geopolitical tensions. In this context, the demand for missiles is likely to gain momentum as these play a very important role in military missions.

Per Markets and Markets projections, the global missile defense system market is expected to witness a CAGR of more than 3.9% over the 2021-2036 period. Such projections exemplify immense opportunities for Lockheed Martin to capitalize on the expanding market.

Prominent defense majors that are likely to enjoy the perks of the expanding missile defense market are Northrop Grumman NOC, General Dynamics GD and Raytheon RTX, which are involved in missile manufacturing or providing support services for the same.

Northrop Grumman’s Missile Products business unit is a leading U.S. provider of solid rocket propulsion for national security and defense, providing stages for weapons systems, such as air-launched missiles, interceptors, submarine-launched systems and hypersonic missile systems.

Northrop has a long-term earnings growth rate of 3.5%. Its investors have gained 1.9% in the past six months.

General Dynamics’ Ordnance and Tactical Systems designs, develops and produces a comprehensive array of sophisticated weapon systems for ground forces and produces next-generation weapon systems for shipboard and aircraft applications. OTS maintains a leading position in providing missile subsystems in support of U.S. tactical and strategic missiles.

General Dynamics boasts a long-term earnings growth rate of 8.6%. The Zacks Consensus Estimate for GD’s 2023 earnings suggests a growth rate of 4.4% from the prior-year reported figure.

Raytheon’s Missiles & Defense is a leading designer, developer, integrator, producer and sustainer of integrated air and missile defense systems. Its technology delivers unprecedented combat power to the world’s most sophisticated fourth and fifth-generation aircraft and across every mission phase.

Raytheon boasts a long-term earnings growth rate of 8.3%. RTX stock has appreciated 15.8% in the past six months.

Price Movement

In the past year, shares of Lockheed Martin have increased 6.7% against the industry’s fall of 16%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Zacks Rank

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

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Lockheed Martin Corporation (LMT) : Free Stock Analysis Report

Northrop Grumman Corporation (NOC) : Free Stock Analysis Report

General Dynamics Corporation (GD) : Free Stock Analysis Report

Raytheon Technologies Corporation (RTX) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research