Lockheed Martin Wins $7B Deal For F-22 Raptor Sustainment

Lockheed Martin Corp.’s (NYSE:LMT) Aeronautics segment recently secured a $7-billion modification contract for providing F-22 Raptor sustainment. The modification contract further includes an option for additional five-year ordering for comprehensive F-22 air vehicle sustainment. The contract has been awarded by the Air Force Life Cycle Management Center, Hill AFB, UT.

Work related to the deal will be executed in five operational bases located in Alaska, Nevada, Florida, Virginia and Hawaii along with six other support locations. It is scheduled to get completed by Dec 31, 2032.

Why is the F-22 Air Vehicle Sustainment Important?

Lockheed Martin, being an original equipment manufacturer (OEM) and support integrator, is closely working with the U.S. Air Force to integrate a total life-cycle systems management process to ensure the F-22 Raptor's performance readiness. Its integration with the U.S. Air Force allows for greater efficiency, lower cost and enhanced responsiveness to the operators of F-22 Raptor.

Lockheed Martin strongly focuses on improving aircraft availability, reducing maintenance hours, and improving reliability and diagnostics, while enhancing efficiency and minimizing costs. Notably, all sustainment activities and new technological advancements are projected to boost demand for the F-22 Raptor.

Growing Stature of Lockheed’s F-22 Raptor

The F-22 Raptor is the first fifth-generation fighter in the U.S. Air Force inventory, whose unique combination of stealth, speed, agility and situational awareness, combined with lethal, long-range, air-to-air and air-to-ground weaponry, makes it the best air dominance fighter in the world. The F-22 Raptor, a critical component of the Global Strike Task Force, is designed to project air dominance for the nation's Air Force, Army, Navy and Marine Corps. Therefore, the $7-billion deal for the F-22 Raptor sustainment will, in turn, have a positive impact on Lockheed’s margins.

Hefty Budgetary Inclusions to Boost Prospects

Earlier this year, the U.S. fiscal 2020 defense budget provisioned for a spending plan of a whopping $57.7 billion on aircraft, reflecting a massive surge of 166% from the approved fiscal 2019 defense spending on aircraft. This increased spending provision should usher in more contracts for Lockheed Martin’s Aeronautics segment, going ahead.

Price Performance

Lockheed Martin’s stock has gained 63.9% in the past year compared with the industry’s growth of 38.4%.

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 (NYSE:LHX) , Air Industries Group (NYSE:AIRI) and Leidos Holdings, Inc. (NYSE:LDOS) , 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 8%. The company delivered average positive earnings surprise of 5.02% in the last four quarters.

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

Leidos Holdings delivered average four-quarter earnings beat of 8.93%. It currently has a solid long-term earnings growth rate of 7.5%.

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