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Lockheed Martin Wins $542M Navy Deal to Support F-35 Program

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Lockheed Martin Corp .'s LMT Aeronautics business unit recently won a $542.2-million contract for delivering ancillary mission equipment (AME) and its associated spares of F-35 Lightning II jets. The contract has been awarded by the Naval Air Systems Command, Patuxent River, MD.

Per the deal, the company will cater to the U.S. Air Force, Marine Corps, Navy, non-Department of Defense (DoD) participants and foreign military sales (FMS) customers. Work related to the deal will be performed in Fort Worth, TX and is expected to get completed by May 2023.

F-35 Lightning II Attributes

The F-35 Lightning jet is a supersonic, multi-role fighter jet, which represents a quantum leap in air-dominance capability offering enhanced lethality and survivability in hostile, anti-access airspace environments. Its advanced stealth allows pilots to penetrate into areas without being detected by enemy radars. It is being used by the defense forces of the United States and other nations worldwide, mainly due to its advanced stealth, integrated avionics, sensor fusion, superior logistics support and powerful integrated sensors capabilities.

What's Favoring Lockheed Martin?

The F-35 program, being Lockheed Martin's largest program, generated 27% of consolidated net sales in third-quarter 2018. Moreover, the Aeronautics division generated solid year-over-year revenue growth of 19.6%, primarily driven by higher net sales of approximately $655 million for the F-35 program. Moreover, production of F-35 is expected to rise, given the rising global demand and U.S. government's current inventory objective of producing 2,456 aircraft required for the Air Force, Marine Corps, Navy and its overseas customers.

The fiscal 2019 budget approved by the U.S. Senate midway last year provisioned for a spending plan of $21.7 billion on aircraft. Interestingly, Lockheed Martin's F-35 program has separately been allotted $10.7 billion. All these aforementioned developments and projections reflect solid growth prospects for Lockheed Martin's F-35 program, which, in turn, will increase the demand for its ancillary equipment, technical services and various other associated spares.

Price Movement

Lockheed Martin's stock has declined 12.8% in the past year compared with the industry 's fall of 3.2%. The underperformance may have been caused by the intense competition the company faces in the aerospace-defense space for its broad portfolio of products and services, both domestically and internationally.

Zacks Rank & Key Picks

Lockheed Martin currently carries a Zacks Rank #3 (Hold).

A few better-ranked companies in the same sector are AeroVironment, Inc. AVAV , The Boeing Company BA and Heico Corporation HEI .

While AeroVironment and Boeing sport a Zacks Rank #1 (Strong Buy), Heico carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

AeroVironment came up with average positive earnings surprise of 257.01% in the last four quarters. The Zacks Consensus Estimate for fiscal 2019 earnings has increased 33.3% to $1.48 in the past 90 days.

Boeing came up with average positive earnings surprise of 28.01% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has increased 4.47% to $18.22 in the past 90 days.

Heico's long-term growth rate for the next 5 years currently stands at 12.10%. The Zacks Consensus Estimate for 2019 earnings has increased 4.00% to $2.08 in the past 90 days.

Zacks' Top 10 Stocks for 2019

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From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 - 2017, they soared far above the market's +126.3%, reaching +181.9%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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