Lockheed Martin Wins Deal to Support F-35 Aircraft Program

Zacks Equity Research

Lockheed Martin Corp.’s LMT business segment, Aeronautics, recently secured a modification contract for providing sustainment support to all Australia, Canada, United Kingdom Reprogramming Laboratory (ACURL) systems for including consumables pertaining to the F-35 aircraft program. The deal has been awarded by the Naval Air Systems Command, Patuxent River, Maryland.

Valued at $18 million, the contract will cater to the governments of Australia, Canada and the United Kingdom. Work related to the deal is scheduled to be over by February 2021 and will be carried out in Eglin, FL.

Importance of F-35 in the Fighter Jet Market

With increased cross-border tensions gripping varied nations across the globe, both developed and developing nations have been ramping up their defense arsenal over the past decade. Notably, military jets comprise major part of the weapon portfolio.

At present, Lockheed Martin’s supersonic, multi-role fighter jet, F-35, is being used by the defense forces of the United States and 11 other nations.

According to Forecast International, a total of 3,401 fighter aircraft are expected to be produced from 2019 through 2028. Notably, the total number of fighters to be produced over the next decade is 17.2% higher than the number of aircraft produced during the previous 10 years. F-35 is anticipated to be the largest fighter program over the next decade.

Of the nearly 3,400 fighters expected to enter the production lines during the next 10 years, 1,548 jets are expected to be F-35s, representing 45.5% of the market. This clearly highlights the importance of the F-35 program in the global fighter jet market.

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.

Taking into account the F-35 program’s solid estimated production rate, as mentioned above, 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 bolster the company’s profit margin.

Price Movement

In a year’s time, shares of Lockheed Martin have gained 31.3% compared with the industry’s 19.2% growth.

Zacks Rank & Key Picks    

Lockheed Martin currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space are L3Harris Technology Inc LHX, Leidos Holdings, Inc. LDOS and Air Industries Group AIRI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

L3Harris’ long-term growth estimate currently stands at 10.4%. The company delivered average positive earnings surprise of 5.02% in the last four quarters.

Leidos delivered average positive earnings surprise of 8.93% in the last four quarters. Its long-term growth estimate currently stands at 7.5%.

Air Industries Group delivered average positive earnings surprise of 52.78% in the last four quarters. The Zacks Consensus Estimate for 2019 loss has increased 63.6% to 4 cents over the past 60 days.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>


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
 
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
 
Air Industries Group (AIRI) : Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
L3Harris Technologies Inc (LHX) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research