Lockheed Martin Corporation’s LMT unit, Sikorsky Aircraft, has secured a significant $84.3 million contract to supply eight gearbox assemblies for the CH-53K helicopters. This contract, awarded by the Naval Supply Systems Command Weapon Systems Support in Philadelphia, PA, will see the work carried out in Stratford, CT, and is scheduled for completion by December 2028. The contract will cater to the needs of both the U.S. Navy and the Israeli military.
This latest win for Lockheed Martin is a testament to the growing demand for advanced military helicopters. As countries worldwide strengthen their defense capabilities, investments in cutting-edge military arms and ammunition are on the rise, including a surge in demand for helicopters critical to air warfare missions. Lockheed, a leading manufacturer of combat helicopters, is reaping the benefits of this trend, consistently receiving orders from the Pentagon and its allies.
The CH-53K King Stallion, designed for modern combat and shipboard operations, is a prime example of Lockheed’s innovative approach to military aviation. This intelligent, reliable, and low-maintenance helicopter is highly survivable in harsh environments, boasting a remarkable record of over 1,200 test flight hours. In 2018 alone, the CH-53K achieved significant milestones, including operating at high altitudes, extreme temperatures, and low visibility. These capabilities, combined with its combat-proven performance, are driving increased demand for the CH-53K, leading to more contract awards for Lockheed Martin.
These consistent order flows, including the latest one, are expected to have a positive impact on Lockheed Martin’s revenues, solidifying its position as a dominant player in the military aviation industry.
The growing military helicopter market presents significant growth opportunities for Lockheed Martin. Driven by factors like rising military conflicts, terrorism, border disputes, and rapid advancements in helicopter technology, nations are increasing their defense spending. Combat-proven helicopters are an integral part of a nation’s defense structure, and Mordor Intelligence projects a compound annual growth rate of over 2.9% for the military helicopter market between 2024 and 2030.
Lockheed Martin is well-positioned to capitalize on this market growth with its portfolio of well-established helicopters, including the Black Hawk, MH-60R Seahawk, CH-148 Cyclone, and the CH-53K King Stallion.
Opportunities for LMT’s Peers
Several other defense companies are also expected to benefit from the expanding military helicopter market:
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The Boeing Company:
Boeing’s military rotorcraft serve the U.S. Army, Navy, Marines, Air Force, and allied defense forces in over 20 countries. Their Defense, Space & Security segment produces rotorcraft and rotary-wing programs such as the H-47 Chinook, AH-64 Apache, AH-6 Little Bird, and V-22 Osprey. Boeing has a long-term (three to five years) earnings growth rate of 21.3%, and analysts anticipate a 21.7% year-over-year sales growth in 2025.*
Northrop Grumman Corporation:
Northrop Grumman’s Fire Scout is a combat-proven, autonomous helicopter system that provides real-time intelligence, surveillance, reconnaissance, target acquisition, laser designation, and battle management capabilities without relying on manned aircraft or space-based assets. Northrop Grumman 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%, and analysts anticipate a 5.4% year-over-year sales growth in 2024.*
Textron:
Textron’s Bell business segment supplies advanced military helicopters and provides parts and support services to the U.S. Government and military customers globally. Their primary combat helicopters include the H-1, Bell 412, Bell AH-1Z, Bell 407, and several other rotorcraft. Textron boasts a long-term earnings growth rate of 10.1%, and analysts anticipate a 5.5% year-over-year sales growth in 2024.LMT Stock’s Price Movement
In the past three months, LMT shares have surged by 24.7%, outperforming the industry’s growth of 8.2%.
LMT’s Zacks Rank
Lockheed Martin currently carries a Zacks Rank #2 (Buy), indicating strong growth potential.
