Concerns about the F-35's combat efficacy may have been overblown.

Earlier this month, we regaled you with the latest report out of the Pentagon's Directorate of Operational Test and Evaluation, in which then-DOT&E Director Michael Gilmore (he's now out of a job) detailed a litany of complaints about the pace of development of Lockheed Martin's (NYSE:LMT) vaunted "stealth" fighter jet:

  •  "objectionable or unacceptable flying qualities"
  • Plane parts failing at accelerated rates
  • Wings incapable of carrying the bomb loads to which they were assigned
  • Planes literally shaking themselves apart in flight

There were 276 "critical" deficiencies in all, rendering it unlikely the F-35 would achieve even "Initial Operational Test and Evaluation" status before 2019. And yet, earlier this month, this very same F-35 fighter jet participated in the U.S. Air Force's "Red Flag" war games at Nellis Air Force Base in Nevada -- and it flew just fine.

F-35A in flight

Lockheed Martin's F-35 is flying high after four victorious weeks in Nevada. Image source: Lockheed Martin.

Red storm rising

Actually, more than fine. Superbly. As reported by earlier this month, over four weeks of training, the Air Force flew 13 "Blue team" F-35A fighter jets in simulated combat against a "Red" force of as many as 20 aircraft at a time -- enemies intent on jamming their radar and killing their planes, aided from the ground by batteries of advanced surface-to-air missiles.

The result: The F-35s achieved a 15-to-1 "kill ratio," shooting down 15 bad guys for every F-35 that got splashed.

Force multiplier

Moreover, in addition to proving itself a formidable aerial combatant, the F-35 served as a force multiplier for its allies.

As Lt. Col. Dave DeAngelis, commander of the 419th operations group, explained, F-35s sortied alongside allied EA-18G Growlers, F-15C, F-16, F-22, British Typhoon fighters, B-1 bombers, and Australian airborne early warning and control craft. Using their advanced digital communications systems, "the F-35 was able to share one threat picture across 70 aircraft" simultaneously, giving its allies a clearer picture of the dogfight than they'd have been able to obtain on their own, and as a result, enhancing the Blue forces' fighting ability as a whole.

Indeed, despite all the complaints that DTO&E raised about the quality of Lockheed's software, 34th Fighter Squadron commander Lt. Col. George Watkins insisted that "all our mission systems were up every time." If given the option of flying a fifth-generation F-35 into combat, or taking in an older fourth generation F-16, Watkins was categorical: "I would not want to go back and take an F-16 back into Red Flag."

What it means to investors

Could it be that reports of the F-35's death have been greatly exaggerated? Judging from the nearly unanimous praise that Lockheed's F-35 is garnering in the aftermath of Red Flag, it sure looks like it.

And reports of the F-35's remarkable 15-to-1 kill ratio, combined with praise from the pilots who flew it, could give Lockheed Martin ammunition in future arguments with President Trump about whether the F-35 is or is not overpriced (and whether Boeing (NYSE:BA) can or cannot produce "a comparable F-18 Super Hornet" at a better price). Sure, at average prices of more than $100 million a pop, F-35 model aircraft cost a lot -- but do they cost 15 times more than comparable fighter jets?

Probably not. Moreover, Lockheed Martin just inked a deal to sell the Air Force F-35As for as little as $95 million, which one imagines will defang future presidential arguments about the F-35's overpricedness. Could be, we're soon going to see Lockheed Martin start selling a lot more of these warbirds. And if management also succeeds in goosing its profit margins up toward the 10.5% operating margin it gets on its other aircraft, that could be even better news for Lockheed Martin stock.