Lockheed Martin Corp.‘s LMT business segment, Space Systems, recently clinched a modification contract for manufacturing its Trident II D5 missile. Per the terms of the deal, Lockheed will also offer deployed systems support and Warhead 93/Mark7 development for Trident II D5 missile. 

Details of the Deal

Valued at $2.11 billion, the contract is projected to be completed by Sept. 30, 2029. The award has been provided by the Strategic Systems Programs, Washington, D.C.

A major portion of work related to this deal will be carried out in Denver, CO, Valley Forge, PA, Titusville, FL and Magna, UT.

LMT Stock’s Place in Missile Market

Lockheed is a well-known manufacturer of missiles and missile defense systems in the global defense industry. While its Missiles and Fire Control business segment provides air and missile defense systems, tactical missiles and air-to-ground precision strike weapon systems like the Patriot Advanced Capability-3 (PAC-3), Terminal High Altitude Area Defense and Hellfire missiles, its Space Systems division builds notable strike missile as well as missile defense systems like the Next Generation Interceptor (NGI). 

As far as Lockheed’s Trident II D5 missile is concerned, it is the latest generation of the U.S. Navy’s submarine-launched fleet ballistic missiles, following the highly successful Polaris, Poseidon and Trident I C4 programs. The fact that this program is the only submarine-launched intercontinental ballistic missile currently in production in the United States surely highlights its significance in the country’s naval defense and the solid demand the company enjoys in the missile marketplace. The latest contract win is a bright example of that.   

With such unique featured missile products in its portfolio, Lockheed frequently enjoys a solid order flow for the company’s missiles from the Pentagon and other U.S. allies. This boosts the top-line growth for its MFC and Space Systems unit. Evidently, LMT’s MFC unit registered 12.6% year-over-year growth in its sales in the last reported quarter, while Space Systems witnessed a 1% top-line rise. 

What Lies Ahead for LMT Stock?

In the past decade, nations across the globe have significantly increased their spending on military equipment and weaponry to modernize and upgrade their defense systems in the face of rapidly rising geopolitical tensions and cross-border disputes worldwide. Amid this backdrop, the demand for missiles has also gained substantial momentum as these play a very important role in military missions.

This must have prompted the Morder Intelligence firm to predict that the global missile and missile defense systems market will witness a CAGR of 5% in the 2024-2029 period. Such solid market expansion projections exemplify immense growth opportunities for Lockheed.

Notably, the company’s Space Systems unit’s major programs include the Next Generation Overhead Persistent Infrared (Next Gen OPIR) system, which provides the U.S. Space Force with enhanced worldwide missile warning capabilities, apart from the Trident II missile. Moreover, its NGI program utilizes next-generation propulsion and sensors to provide homeland missile defense.

Growth Opportunities for LMT’s Peers

Apart from LMT, other prominent defense majors that are likely to enjoy the perks of the expanding global missile and missile defense market are mentioned below:

Northrop Grumman NOC: It manufactures notable strike missiles like the Advanced Anti-Radiation Guided Missile Extended Range (AARGM-ER), which is a supersonic, air-launched tactical missile system. NOC’s Missile Products business unit is a leading U.S. provider of solid rocket propulsion for national security and defense, providing stages for weapon systems, such as air-launched missiles, interceptors, submarine-launched systems and hypersonic missile systems.

NOC has a long-term earnings growth rate of 8.7%. The Zacks Consensus Estimate for its 2024 sales implies growth of 5.4% from the prior-year reported figure.

The Boeing Company BA: Its air and missile defense systems have been protecting the United States, warfighters, allies and international partners against threats ranging from intercontinental ballistic missiles to hostile aircraft for the past 25 years. Its renowned missile and related products include the Aegis Ballistic Missile Defense, PAC-3 Missile Seeker, Ground-Based Midcourse Defense and a few more. 

BA boasts a long-term earnings growth rate of 21.3%. The Zacks Consensus Estimate for BA’s third-quarter 2024 sales indicates growth of 10% from the prior-year reported figure.

RTX Corp. RTX: It is a renowned manufacturer of missiles and missile defense systems. RTX’s product portfolio includes combat-proven missiles like the TOW missile, Guidance Enhanced Missile, Advanced Medium Range Air-to-Air Missile, Tomahawk, Standard Missile 2 and a few more. 

RTX boasts a long-term earnings growth rate of 10.4%. The Zacks Consensus Estimate for its 2024 sales indicates growth of 7% from the prior-year reported figure.

Price Movement

In the past year, shares of Lockheed have surged a solid 49.3% compared with the industry’s growth of 17.9%.

Image Source: Zacks Investment Research

Zacks Rank

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

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