Lockheed Martin Corporation (LMT), AeroVironment, Inc. (AVAV): An Update on the Defense Industry

Page 1 of 2

Lockheed Martin Corporation (NYSE:LMT)The next generation of the USAF is the F-35 Lighting II. The F-35 will have 3 different models; the F-35A, which has the conventional take off and land variant; the F-35B, which can perform a short take off and land vertically; and the F-35C, which is made for aircraft carriers and can launch from a short runway. The first of these models, the F-35B, will be rolled out in December 2015. All of these planes are made by .

The US is planning on buying 2,443 F-35′s. The F-35 is a part of the Joint Strike Fighter program that the US, UK, Canada, Norway, Australia, Denmark, Italy, Turkey, and the Netherlands are a part of. Lockheed Martin Corporation (NYSE:LMT) will sell all those planes for a total of $391.2 billion, and the whole program will cost $1.66 trillion over the course of many years. This is the largest defense contract in history, and will be a huge needle mover for those involved.

is going to make the engines for those jets, and both UTX and Lockheed Martin Corporation (NYSE:LMT) will reap huge rewards if they can finally get the project done. In 2019 there is going to be an engine upgrade on the first 2 planes that are rolled out before 2019, when the F-35C is finished.

There have been numerous setbacks that have delayed the rollout of the first F-35 until December 2015, but in March the Government Accountability Office said that the JSF program was slowly moving in the right direction.
UTX and Lockheed will continue to see their stocks move as more updates are provide on the program, but it will be a wild ride until the planes are up in the sky.

UTX pays out a 2.3% dividend yield which is significantly smaller than Lockheed Martin Corporation (NYSE:LMT)’s impressive 4.3%. But if you look at payout ratios Lockheed pays 49% of its profits in dividends while UTX only pays 38%. If UTX was to crank up its payout ratio to Lockheed’s levels, then its dividend would be just shy of 3%. UTX also is expected to grow its EPS by 13.5% over the next few years, which will enable it to raise its dividend yield.

Lockheed Martin Corporation (NYSE:LMT) should start seeing some very strong growth over the next few years with the sale and maintenance of these F-35′s. This will be a boon to its stock price, as its PE ratio (TTM) is 12 as very little growth is priced into this stock.

Drones

Over the weekend the State Department said it was halting its $1 billion drone surveillance program, which will come as a harsh blow to companies like AeroVironment, Inc. (NASDAQ:AVAV). Aero makes 4 different type of UAS (unmanned aircraft systems), which are used for surveillance, are smaller than a human, and fly low to the ground. Aero has had revenue (TTM) of $297 million, so part of that $1 billion would have been big news.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!