For Lockheed, war does not always mean growing profits. This is borne out by its rather lackluster share price between 2002 and 2012, at a time when the US was embarking on an all-out campaign against terrorism, in Afghanistan and then Iraq.
In fact, it was above all the marketing of the F-35 - the latest-generation multi-role fighter that now equips all the major NATO countries except France - that changed the fortunes of the company for the better. In an industry prone to very long business cycles - both up and down - sales of the F-35 have ensured Bethesda's group a solid decade of growth and prosperity.
Of course, investors were not unhappy with the considerably increased capital distributions - dividends and share buy-backs - that followed, hence the meteoric rise in stock market valuation over the cycle.
However, it is possible that this sequence of growth is about to run out of steam, even if consolidated sales should reach an all-time high in 2024, breaking with four years of relative stagnation since the start of the pandemic.
As proof: in 2024, F-35 deliveries are down 40% on the same period last year, while the order book for the aeronautical segment is down 17%. This development, feared by analysts, is the reason why the group's valuation multiples have intermittently fallen below their historical averages.
Against this backdrop, the war in Eastern Europe is benefiting Lockheed and boosting its stock market image. For example, the aeronautics segment is benefiting from orders for the modernization of the F-16 - an almost fifty-year-old platform recently put to use in Ukrainian skies - which, along with an order for C-130s, is offsetting the decline in F-35 sales.
Even more remarkable is the growth in missile sales - guided rockets used by the famous HIMARS, so feared by the Russians, or anti-aircraft missiles equipping Patriot batteries - again directly linked to the situation in Eastern Europe. Of the Group's four segments, this is the only one to post a sharp rise in orders.
All in all, for the first nine months of the year, Lockheed's earnings per share are perfectly stable - at $20, the same as in 2023 at the same time. Nevertheless, without the massive share buybacks - another 5.2% of outstanding shares delisted this year! - it would have fallen significantly, even with a very high-intensity war in Ukraine.
