Core Insights - Lockheed Martin Corp. (LMT) has delivered the first Aegis System Equipped Vessel (ASEV) shipset to the Japan Ministry of Defense, marking a significant step in the U.S.-Japan security alliance [1][2] - The delivery highlights Lockheed's growing presence in the radar market, particularly with its SPY-7 radar, which is noted for its advanced capabilities and international demand [3] - Despite the positive developments, LMT's stock has underperformed compared to industry peers and broader market indices, raising concerns for potential investors [5][6] Delivery and Strategic Importance - The first ASEV shipset includes four AN/SPY-7(V)1 radar antennas, with two ASEVs expected to be commissioned by March 2027 and 2028 [1] - This delivery reinforces the long-standing security alliance between the U.S. and Japan, with Lockheed providing advanced defense technologies [2] Market Position and Product Demand - Lockheed's SPY-7 radar is recognized as one of the most powerful and versatile radars globally, contributing to its rising international demand [3] - The radar technology is set for deployment on naval vessels in Spain and Canada, indicating its broad acceptance in the international market [3] Stock Performance and Valuation - LMT shares have declined by 4.7% year-to-date, underperforming the Zacks Aerospace-Defense industry's growth of 21.8% and the S&P 500's return of 5.4% [5] - The company's forward 12-month price-to-earnings (P/E) ratio is 16.21X, which is lower than the peer group's average of 18.25X, suggesting a discounted valuation [16] Long-Term Growth Drivers - The F-35 program is a key long-term growth driver for Lockheed, with 1,149 F-35 airplanes delivered as of March 30, 2025, and a backlog of 361 jets [7][10] - Lockheed's international defense contracts, including PAC-3 missiles and THAAD systems, further support its long-term growth expectations [11][12] Near-Term Estimates - The Zacks Consensus Estimate for LMT's 2025 and 2026 sales indicates year-over-year improvements of 4.7% and 3.7%, respectively [13] - However, earnings estimates for 2025 suggest a decline, while a 9.1% increase is expected for 2026 [13] Industry Context - Lockheed's industry peers, such as Boeing and Embraer, have shown substantial stock gains year-to-date, with Embraer rising by 62.6% [6] - The defense sector faces challenges, including labor shortages that could impact production and operational performance [18][19]

Positive tariff news and some industry-specific speculation concerning future business helped light a rocket under defense stocks, sending the entire sector up. AeroVironment (AVAV 14.01%) shares led the way up 14%, and shares of Lockheed Martin (LMT 3.34%), Northrop Grumman (NOC 3.26%), and Science Applications International (SAIC 2.53%) all climbed as high as 5% before fading some heading into market close. New opportunities up ahead? Defense stocks have held up relatively well through this period of unce ...