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Lockheed Martin Wins $41.3M Navy Deal to Aid F-35 Program

Zacks Equity Research

Lockheed Martin Corp.’s LMT Aeronautics business division recently secured a modification contract to design, procure and integrate flight test instrumentation and data processing solutions for F-35 Lightning II development test aircraft. Work related to the deal will be executed in Fort Worth, TX.

Details of the Deal

Valued at $41.3 million, the contract was awarded by the Naval Air Systems Command, Patuxent River, Maryland. The task will support the Tech Refresh-3 and the Follow-on Modernization Block 4 mission systems configuration.

The deal, with expected completion date of February 2021, will cater to the U.S. Air Force, Navy, Marine Corps and non-U.S. Department of Defense (DoD) partners.

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. Currently, this jet 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. At the company’s Aeronautics division, the program fueled annual revenue growth by 19.6%. 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.

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

Taking into account the F-35 program’s solid estimated production rate, the latest contract win should further provide a boost to this program in the coming days.

Such developments reflect solid prospects for Lockheed Martin’s F-35 program, which are likely to boost the company’s profit margin.

Price Movement

In a year’s time, shares of Lockheed Martin have gained 19.5% compared with the industry’s 4.1% rise.


Zacks Rank & Key Picks    

Lockheed Martin currently carries Zacks Rank #3 (Hold). A few better-ranked stocks in the same space are General Dynamics Corp. GD, Northrop Grumman Corp. NOC and Textron Inc. TXT, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

General Dynamics’ long-term earnings growth estimate currently stands at 8.9%. The Zacks Consensus Estimate for 2019 earnings has moved 0.3% up to $11.76 over the past 90 days.

Northrop Grumman’s long-term earnings growth estimate currently stands at 12.8%. The Zacks Consensus Estimate for 2019 earnings has climbed 2.5% to $19.41 over the past 90 days.

Textron’s long-term earnings growth estimate is pegged at 12.6%. The Zacks Consensus Estimate for 2019 earnings has moved 0.8% north to $3.70 over the past 90 days.

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