Lockheed Beats and Raises, But Street Expects More

Lockheed Martin reported third-quarter earnings growth above Street estimates and also upward revised its full-year EPS outlook, although analysts project even stronger growth ahead. Q3 net income increased 22% to $766 million, or $1.80/share, on 16% higher sales to $11.1B. Analysts had expected $1.64/share on sales of $10.4B, on average. CEO Bob Stevens highlighted Lockheed's double-digit sales and operating earnings growth across all of its business segments. A Citigroup analyst wrote in a note to clients earlier this month that "Lockheed Martin has more margin expansion potential than recognized." Operating margins improved to 11.1% in Q3 vs. 10.2% last year. Lockheed raised its full-year EPS forecast to $6.70 to $6.85, from $6.65 to $6.80 previously and still expects revenues between $41.0B to $41.75B. Analysts were forecasting $6.86/share on revenues of $41.69B. In 2008, Lockheed said it expects EPS between $6.95 to $7.15, on sales of $41.25B to $42.75B, compared to analyst estimates of $7.23/share and $42.85B. Shares of Lockheed Martin rose 1% to $107.24 on Monday and were last up 0.7% to $108 in very thin trading in Tuesday's pre-market.

Sources: Press release, Bloomberg, MarketWatch
Commentary: Friday's Profit-Taking a Prelude to a Positive Earnings Week • Notes on the Defense Industry and Stocks • Lock In On Lockheed's Raised Dividend
Stocks to watch: LMT. Competitors: BA, NOC, RTN. ETFs: ITA, PPA, XLI

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