Lockheed Martin: The Year In Review

+7.78%
Upside
455
Market
490
Trefis
LMT: Lockheed Martin logo
LMT
Lockheed Martin

Lockheed Martin (NYSE: LMT) has had quite an eventful year in 2016. The company has carried out major restructuring over the last year, with the acquisition of Sikorsky and the sale of its Information Systems and Global Solutions (IS&GS) business to Leidos. The management has stressed its intention to streamline operations and focus on what they do best. Furthermore, after many technical glitches, Lockheed has finally managed to fix the major problems related to the F-35 project. The year saw additional orders being placed for the fighter jet, both from the U.S. government and other allied countries. Revenues and earnings grew consistently over the quarters. Here are a few key takeaways:

The F-35 Program is all Set to Soar

Within the year, customer support and demand for the F-35 has increased tremendously. Key milestones included the rollout of the first F-35 aircraft for the Japan Air Self-Defense Force. The company is on track to provide Japan with 42 aircraft for its national defense requirements. Furthermore, Norway stated its interest to participate in a multiyear, multinational block buy of the F-35. In its 2017 budget, the country outlined a request to buy 12 F-35 fighters and remains on track to purchase a total of 52 aircraft for its national defense needs.

Relevant Articles
  1. Should You Pick Lockheed Martin Stock At $430 After Q4 Beat?
  2. Down 20% This Year Is RTX A Better Pick Over Lockheed Martin Stock?
  3. After An 8% Rise In A Month What’s Next For Lockheed Martin Stock
  4. Which Is A Better Pick – Lockheed Martin Stock Or Starbucks?
  5. Why The Space Theme Is Underperforming This Year
  6. Here’s What We Expect From Lockheed Martin’s Q2

Despite Trump’s recent tweet, it seems likely that the program will receive a major cash boost when Trump takes office, as Lockheed works hard to reduce costs per plane.  The Pentagon plans to purchase over 2,400 aircraft with an intention to boost the manned tactical airpower of the U.S. Air Force, Navy, and the Marine Corps over the coming decades. Deliveries of the F-35 is expected to be concluded by 2037, with a projected service life out to 2070. It is the company’s belief that the F-35 program could one day account for over 50% of the total revenue at Lockheed in a given year. At present, the aircraft already accounts for about 21% of the defense contractor’s total business.

International Sales Reach Record Highs

Over the past two years, Lockheed Martin has worked to try and improve its sales from international customers. The company had previously aimed to expand its focus and footprint overseas in an attempt to achieve 25% of annual sales from international customers. Due to a change in its portfolio content, resulting from the acquisition of Sikorsky and the divesture of IS&GS, the company seems on track to exceed the goal this year. In general, international work across all segments expanded in the last four quarters. The increased sales of F-35 Joint Strike Fighter, missile defense systems, C-130J cargo planes and tactical missiles abroad are testament to this fact.

The ageing equipment in allied countries, coupled with an expanding level of global security needs, is creating significant demand for the vast portfolio of products the company has to provide.

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
More Trefis Research