Lockheed Martin's Unit Secures Contract for CH-53K Gearbox Assemblies

Lockheed Martin Corporation's LMT unit, Sikorsky Aircraft, recently secured an $84.3 million contract to supply eight gearbox assemblies for the CH-53K helicopters. The work will be carried out in Stratford, CT, and is set to be completed by December 2028.

The contract will serve the U.S. Navy and Israel military. The award has been provided by the Naval Supply Systems Command Weapon Systems Support, Philadelphia, PA.

What's Favoring LMT Stock?

With countries worldwide enhancing their defense capabilities, spending on advanced military arms and ammunition has been rapidly increasing. This also includes growing investments in military helicopters, which are crucial for air warfare missions. Lockheed, as a prominent manufacturer of combat helicopters, has been witnessing a steady flow of orders from the Pentagon and other U.S. allies. The latest contract win is an example of that.

LMT's CH-53K King Stallion is designed for modern combat and shipboard operations, being intelligent, reliable, low-maintenance and highly survivable in harsh environments. With more than 1,200 test flight hours, the helicopter achieved several milestones in 2018, including operating at high altitudes, extreme temperatures and low visibility.

These capabilities are likely to have driven this rotorcraft's demand in recent times and are expected to lead to more contract awards for Lockheed Martin in the days ahead. Such order flows, including the latest one, are expected to boost the company's revenues, thereby solidifying its position as a leading defense contractor in military aviation.

Growth Prospects for LMT Stock

Rising military conflicts, terrorism and border disputes, along with rapid technological advancements in military helicopters, have led nations to increase their defense spending, with combat-proven helicopters constituting an integral part of a nation's defense structure.

This is likely to have prompted Mordor Intelligence to forecast a compound annual growth rate of more than 2.9% for the military helicopter market during the 2024-2030 time period.

Such solid market prospects offer growth opportunities for Lockheed Martin. Notably, its portfolio includes well-established helicopters like the Black Hawk, MH-60R Seahawk and CH-148 Cyclone, in addition to the CH-53K King Stallion.

Opportunities for LMT's Peers

Some other defense companies that are expected to enjoy the perks of the expanding military helicopter market have been discussed below.

The Boeing Company: Its military rotorcraft serves the U.S. Army, Navy, Marines and Air Force and allied defense forces in more than 20 countries across the globe. Boeing's Defense, Space & Security segment produces rotorcraft and rotary-wing programs, such as H-47 Chinook, AH-64 Apache, AH-6 Little Bird and V-22 Osprey.

The company has a long-term (three to five years) earnings growth rate of 21.3%.  The Zacks Consensus Estimate for BA's 2025 sales indicates year-over-year growth of 21.7%.

Northrop Grumman Corporation NOC: Its Fire Scout is a combat-proven, autonomous helicopter system providing real-time intelligence, surveillance, reconnaissance and target-acquisition, laser designation and battle management to tactical users without relying on manned aircraft or space-based assets. NOC also provides avionics systems, mission equipment and support for military helicopters, including upgrades and modifications.

The company's long-term earnings growth rate is 8.7%. The Zacks Consensus Estimate for NOC's 2024 sales indicates year-over-year growth of 5.4%.

Textron TXT:  Its Bell business segment supplies advanced military helicopters and provides parts and support services to the U.S. Government and military customers outside the United States. Its primary combat helicopters include H-1, Bell 412, Bell AH-1Z, Bell 407 and a few more rotorcraft.

TXT boasts a long-term earnings growth rate of 10.1%. The consensus estimate for TXT's 2024 sales indicates year-over-year growth of 5.5%.

LMT Stock's Price Movement

Shares of LMT have gained 24.7% in the past three months compared with the industry's 8.2% growth.

Image Source: Zacks Investment Research

LMT's Zacks Rank

LMT currently carries a Zacks Rank #2 (Buy).

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