Big boosts to defense spending are building up backlogs at government military industrial contractors like Lockheed Martin, reports Doug Cameron. Orders for F-35s and THAAD missile systems are booming. Cameron writes in The Wall Street Journal:
The world’s largest defense company by sales has been a prime beneficiary of Congress boosting Pentagon spending above requests from the White House in an effort to replace worn-out equipment and address an array of threats, including North Korea’s nuclear program and military buildups by Russia and China.
Investors have fretted that defense companies weren’t translating the buoyant military budget climate into higher sales and profits, but Lockheed Martin raised its own full-year financial guidance after reporting forecast-beating quarterly earnings.
Chief Executive Marillyn Hewson on Tuesday highlighted additional F-35 combat jets and Thaad missile defense systems requested by Congress during an upbeat investor call that helped reverse an early drop in Lockheed shares.
Lockheed ended the quarter with a backlog of $105 billion, which it expects to rise with a final agreement on selling another 141 F-35 jets. Lockheed Martin is also contesting two other big Pentagon contracts: an Air Force trainer and a refueling drone for the Navy.
Read more here.