>>> Lockheed Martin’s (LMT), a Maryland-based defense giant, is a critical defense supplier for the U.S. and its allies. The company develops and manufactures advanced military aircraft. In addition, it provides air-to-ground precision strike weapon systems, tactical missiles and air and missile defense systems.
Lockheed Martin’s F-35 program will be a key growth driver. In 2022, the F-35 program accounted for 27% of total sales and 66% of the Aeronautics segment’s net sales. Given the rising U.S.-China tensions, the U.S. and its allies are banking on F35 fighter jets to bolster their defenses.
There are reasons for optimism after the debt ceiling deal met President Joe Biden’s $886 billion request for fiscal year 2024. As a result, the F-35 will receive funding to produce 83 F-35 aircraft. Besides, there is increasing interest from allies. For instance, Israel recently approved the purchase of 25 F-35 jets.
As orders increase, revenue growth is accelerating. In the second quarter of FY2023, the aeronautics segment grew sales 17% year-over-year. The increase was mainly due to a rise in production contracts.
Looking at the Missiles and Fire Control segment, sales were flat. While the year-over-year growth was disappointing, the backlog trend was positive. The segment recorded a backlog increase of $5.3 billion to close the quarter at $34 billion.
With a record backlog and growing revenues, the company is in a strong position to return capital to shareholders. It has a strong record of shareholder returns, having repurchased 21% of its outstanding shares in the last 10 years. Additionally, it has increased its dividend for 20 consecutive years.
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