Lockheed Martin Corporation LMT has recently clinched a commendable modification contract for its esteemed F-35 aircraft. The prestigious award has been bestowed upon them by the esteemed Naval Air Systems Command, Patuxent River, MD.
A Maverick Deal
The contract, valued at a staggering $439.9 million, is projected to conclude by December 2029. Under the terms of this covetable deal, Lockheed will offer top-notch logistics and support for the F-35A, F-35B, and F-35C aircraft.
This agreement encompasses the provision of support equipment, pilot flight gear, post-ejection survival training material, along with ancillary administrative, contract management, planning, and readiness reviews. It also includes non-recurring introduction to service support aiding site activation and initial sustainment activities.
A lion’s share of the work related to this magnanimous deal will unfold in the bustling, thriving environs of Redondo Beach, CA. This contract will span across services for the U.S. Air Force, Marine Corps, Navy, non-Department of Defense participants, and Foreign Military Sales customers.
F-35 Jets and Their Stark Significance
The F-35, Lockheed’s crowning jewel, stands as the most lethal, survivable, and interconnected fighter jet globally. It possesses the unparalleled capability to securely connect cutting-edge platforms, allowing for seamless information sharing across every domain – air, land, sea, space, and cyber. This marvel of aviation exists in three prominent variants – F-35A (conventional takeoff and landing), F-35B (short take-off and vertical landing), and F-35C (carrier-based).
The exceptional features of this formidable fighter jet are steadily garnering resounding contract victories for LMT, exemplified by the latest triumph. Consequently, the F-35 program retains its status as a major revenue driver for the United States’ preeminent defense contractor.
Strikingly, the F-35 program emerged as the primary revenue generator for Lockheed’s esteemed Aeronautics business unit. This program accounted for a remarkable 64% of the segment’s net sales in the bygone year of 2023 and 26% of LMT’s total consolidated net sales. Since its inception, Lockheed has delivered a formidable fleet of 992 F-35 airplanes, with a backlog of 373 jets as of December 31, 2023.
With anticipated deliveries of 147-153 jets in 2024 and a robust 156 in 2025 and beyond, coupled with the latest contract coup, it is evident that the F-35 program sails on the winds of strong demand in the combat jet market.
Prospects of Expansion
Amid the simmering cauldron of geopolitical tensions besieging the globe, nations are hastening to raise their defense spending to acquire more fighter jets. This, in turn, propels the robust growth prospects of the military aviation industry. A report by the Expert Market Research firm even suggests that the global military aircraft market is poised to chart a commendable CAGR of 5.10% during the lucrative period of 2024-2032.
Such promising projections underscore ample growth opportunities for distinguished combat jet manufacturers like Lockheed. The splendid portfolio of fighter jets by the company includes illustrious names such as the C-130 Hercules, F-16 Fighting Falcon, F-22 Raptor, in addition to the iconic F-35 jets. In the preceding year of 2023, approximately 40% of Lockheed’s sales stemmed from the Aeronautics segment, renowned for crafting these legendary fighter jets.
Opportunities Abound
As the military aircraft market expands, several other players in the defense realm eye a slice of the pie. Notable names such as Airbus SE EADSY, Boeing BA, and Northrop Grumman NOC are poised to seize the opportunities presented.
Airbus’ dazzling array of military aircraft comprises the A400M, C295 tactical transporter, the cutting-edge A330 Multi Role Tanker Transport, and Eurofighter – hailed as the most advanced swing-role fighter ever conceptualized. Impressively, a significant 61% of the Defence and Space segment’s revenues in the bygone year flowed from military air systems. As of December 31, 2023, the company had delivered a stellar count of 1,783 military aircraft.
Boasting a commendable long-term (three-to-five years) earnings growth rate of 12.4%, Airbus is geared for a successful trajectory ahead. The Zacks Consensus Estimate for Airbus’ sales in 2024 alludes to a noteworthy improvement of 9.5% from the figures reported in 2023.
Boeing, another stalwart in the field, parades a broad spectrum of combat-tested aircraft including the formidable F/A-18 Super Hornet, P-8, C-17 Globemaster III, EA-18G, and several others. In the bygone year of 2023, Boeing delivered a fleet of 22 F/A-18s, nine F-15s, three T-7A Red Hawks, and 11 P-8 models.
For Boeing, a long-term earnings growth rate of 4% hints at a promising future. The Zacks Consensus Estimate for Boeing’s sales in 2024 showcases a commendable uptick of 13.1% from the figures posted in 2023.
The hallowed halls of Northrop Grumman resonate with the creation of some of the world’s most groundbreaking aircraft, ranging from the innovative B-2 Spirit stealth bomber to the revolutionary E-2D Advanced Hawkeye. Noteworthy triumphs in 2023 for NOC included a plethora of substantial awards such as $2.1 billion for F-35 programs, $1.7 billion for E-2, and $1.5 billion for Triton.
Northrop Grumman stands tall with a commendable long-term earnings growth rate of 10.1%. The Zacks Consensus Estimate for Northrop Grumman’s sales in 2024 heralds an improvement of 4.6% from the figures recorded in 2023.
Performance on the Bourses
In the preceding three months, LMT’s shares saw a commendable uptick of 0.8%, a noteworthy contrast to the aerospace and defense sector’s slump of 3.6%.
Image Source: Zacks Investment Research
Insightful Zacks Rank
Presently, Lockheed Martin holds a Zacks Rank #4 (Sell).
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The perspectives and opinions articulated herein represent the insights and outlook of the author and do not necessarily coincide with those of Nasdaq, Inc.
