Global military aircraft market set for a boom, Lockheed Martin’s F-35 program to benefit

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This surge follows a period of uncertainty during the COVID-19 pandemic which initially threatened a downturn in the military aerospace sector due to budget tightening and healthcare improvements. The landscape shifted considerably following Russia’s invasion of Ukraine in 2022, which sparked increased defense spending notably in Europe, but also raised concerns in East Asia and the Middle East.

Countries are now accelerating their recapitalization plans and strengthening military capabilities in response to rising defense budgets. Fighter aircraft represent the most valuable market segment with $485 billion expected to be spent over the decade. Lockheed Martin’s F-35 program is set to gain significantly with an expected delivery of at least 1,600 aircraft worth $165 billion between 2024 and 2033.

While $252 billion worth of military aircraft deliveries are already under contract, there exist significant opportunities with $202 billion worth of open requirements worldwide. Asia, North America, and the Middle East account for 26%, 25%, and 22% of these requirements respectively.

The global military aircraft fleet is projected to grow by 3.9% from 56,859 to 59,064 over the next decade, largely driven by uncrewed aircraft. The crewed aircraft fleet’s growth is set at a Compound Annual Growth Rate (CAGR) of 0.2% over the decade compared to 4.6% for uncrewed, as air forces enhance surveillance capabilities and explore the use of autonomous combat aircraft.

As the global military aircraft market prepares for a significant upturn, it’s worth noting some key data points and insights on Lockheed Martin (NYSE:LMT), a prominent player in the Aerospace & Defense industry.

InvestingPro Data suggests that the company has a solid market cap of $112.11 billion and a relatively low P/E ratio of 16.43, indicating that the company’s shares could be undervalued. The company’s revenue growth over the last twelve months as of Q3 2023 was 4.58%, suggesting a steady financial performance.

Two InvestingPro Tips that stand out for Lockheed Martin are that the company has been aggressively buying back shares and has raised its dividend for 21 consecutive years. This demonstrates management’s confidence in the company’s financial health and their commitment to returning capital to shareholders.

For those interested in the company’s future prospects, the InvestingPro platform offers a wealth of additional insights and tips. These include the company’s return on invested capital, its P/E ratio relative to near-term earnings growth, and the level of debt it operates with, among others. With these insights, investors can make more informed decisions about their investments in the Aerospace & Defense industry.

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