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Lockheed Martin Wins $1.8B Deal to Support F-35 Jet Program

Zacks Equity Research

Lockheed Martin Corp.’s LMT business segment, Aeronautics, recently clinched a contract to conduct continued design maturation and development of Block 4 capabilities for supporting the F-35 Lightning II Phase 2.3 Pre-Modernization. The deal has been awarded by the Naval Air Systems Command, Patuxent River, Maryland.

Valued at $1.8 billion, the contract will cater to the U.S. Air Force, Navy, Marine Corps and non-U.S. Department of Defense (DoD) participants. Work related to the deal is scheduled to be over by August 2026 and will be carried out in Fort Worth, TX.

A Brief Note on F-35 Program

The F-35 Lightning is a supersonic, multi-role fighter jet that represents a quantum leap in air-dominance capability, offering enhanced lethality and survivability in hostile, anti-access airspace environments. It is being used by the defense forces of the United States and 11 other nations, chiefly owing to its advanced stealth, integrated avionics, sensor fusion, superior logistics support and powerful integrated sensors capabilities.

What Favors Lockheed Martin?

The F-35 is Lockheed Martin’s largest program that generates more than 25% of its total sales. Last year, the program fueled annual revenue growth by 19.6% at the company’s Aeronautics division. Keeping up with this trend, we may expect the latest contract win to help the Aeronautics unit deliver similar or even better performance in the upcoming quarters.

Given the U.S. government’s current inventory objective of 2,456 aircraft for the Air Force, Marine Corps and Navy, and commitments from the company’s eight international partners, overseas customers along with rising global demand for military jets, the production of F-35 is expected to improve in the coming days.

Considering these developments, the latest contract win should support the F-35 program’s solid estimated production rate.

Price Movement

In a year’s time, shares of Lockheed Martin have gained 11.5% against the industry’s 2.1% decline.

 

Zacks Rank & Other Stocks to Consider

Lockheed Martin currently holds a Zacks Rank #2 (Buy). A few similar-ranked stocks in the same industry are Leidos Holdings, Inc. LDOS, Northrop Grumman Corp. NOC and Wesco Aircraft Holdings, Inc. WAIR, each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Leidos Holdings delivered average positive earnings surprise of 6.81% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has moved 1.5% up to $4.60 over the past 90 days.

Northrop Grumman delivered average positive earnings surprise of 18.50% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has climbed 2.3% to $19.42 over the past 90 days.

Wesco Aircraft’s long-term earnings growth estimate is pegged at 12%. The Zacks Consensus Estimate for fiscal 2019 earnings has moved 3.7% north to 84 cents over the past 90 days.

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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
 
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
 
Wesco Aircraft Holdings, Inc. (WAIR) : Free Stock Analysis Report
 
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