America's most expensive weapons system may finally be getting its act together

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While the F-35 Lightning II continues its turbulent march to combat readiness, the jet's manufacturer posted better than expected quarterly revenue earnings on Tuesday.

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Lockheed Martin, the Pentagon's top weapons supplier, also lifted its 2016 revenue and profit forecasts for a second time - despite significant snags in developing America's most expensive arms program.

Considered a bellwether for the US defense sector, Lockheed Martin's stock also posted a record high of $261.37 in early trading on Tuesday. What's more, the world's largest defense contractor's shares were already up approximately 18% this year.

And all of this is great news for the troubled fifth-generation stealth fighter jet.

f35b

Lockheed Martin

An F-35B from Marine Fighter Attack Training Squadron 501 (VMFAT-501), flies near its base a MCAS Beaufort, South Carolina.

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"(The) consensus expectations are finally positive for the F-35 and for improvement in the defense budget, which has led to a higher valuation," Bernstein analyst Douglas Harned wrote in a note, according to Reuters.

The now nearly $400 billion F-35 weapons program was developed in 2001 to replace the US military's F-15, F-16, and F-18 aircraft.

Lockheed Martin's "jack of all trades" F-35s were developed to dogfight, provide close air support, execute long-range bombing attacks, and take off from and land on aircraft carriers - all while using the most advanced available stealth capabilities.

Adding to the complexity, Lockheed Martin agreed to design and manufacture three variant F-35s for different sister service branches.

The Air Force has the agile F-35A; the F-35B can take off and land without a runway, ideal for the amphibious Marine Corps; and the F-35C is meant to serve on the Navy's aircraft carriers.

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As it stands now the Pentagon expects to buy 2,457 of these supersonic warplanes.

f35 variants

Lockheed Martin

All three F-35 variants at Edwards Air Force Base, Calif. Left to right: F-35C carrier variant, F-35B short takeoff/vertical landing variant, F-35A conventional takeoff and landing variant.

According to Lockheed Martin, sales in its aeronautics business, the company's largest, rose 6% in the past three months due to delivery of 14 F-35s.

The company has said it plans to deliver 53 F-35 jets in 2016, up from 45 a year earlier.

Highlights from Lockheed Martin's quarterly earnings report:

  • Net sales rose to $12.91 billion (from $11.64 billion in Q2 2015)
  • Net income rose to $1.02 billion (or $3.32 per share), which is up from $929 million (or $2.94 per share) in Q2 2015
  • Generated $1.5 billion in cash from operations
  • Raised 2016's profit forecast to $12.15-$12.45 per share (from $11.50-$11.80)
  • Raised 2016's full-year sales of $50.0 billion-$51.5 billion (from earlier estimate of $49.6 billion-$51.1 billion)

Defense giants Northrop Grumman and Raytheon are expected to report quarterly results next week.

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Reuters contributed to this report.

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