Lockheed Martin Wins $242M Contract For F-35 Production

Lockheed Martin Corp.’s (NYSE:LMT) Aeronautics division won a contract from the Naval Air Systems Command, Patuxent River, MD for the procurement of diminishing manufacturing sources electronic components. This is a modification contract valued at $241.8 million.

Per this contract, Lockheed Martin will support aircraft production through Lot 15 for U.S. and international facilities for the F-35 Lightning II aircraft. The majority of work will be performed in Burlington, VT and is expected to be completed in Dec 2018.

The latest contract combines purchases for the U.S. Air Force, Navy, Marine Corps, foreign military sales (“FMS”) customers and international partners under the FMS program.

The company has secured quite a few major contracts from the Pentagon as well as from foreign allies related to F-35, helping it to remain in the limelight. Importantly, revenues will likely be rising on its F-35 program as seen in its recently released second-quarter results.

The Pentagon’s prime contractor reported second-quarter 2016 earnings of $3.32 per share, surpassing the Zacks Consensus Estimate of $2.92 by 13.7%. Earnings also increased 12.9% from the year-ago level owing to higher deliveries of F-35 fighter jets as well as higher sales from its Sikorsky helicopter unit.

The company not only reported better-than-expected earnings, but also boosted this year’s projection. Revenues for 2016 are expected to be in the range of $50 billion to $51.5 billion (earlier projection: $49.6 billion to $51.1 billion), while earnings per share are expected in the $12.15–$12.45 range (earlier projection: $11.50–$11.80). The company also expects a higher operating profit of $5,725–$5,875 million from the earlier projection of $5,625–$5,775 million.

Zacks Rank

Lockheed Martin currently carries a Zacks Rank #2 (Buy). Other well-placed stocks in the aerospace and defense sector include General Dynamics Corp. (NYSE:GD) , Northrop Grumman Corp. (NYSE:NOC) and Orbital ATK Inc. (NYSE:OA) , all with the same Zacks rank as Lockheed Martin.

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