- Lockheed Martin is one of the world's largest defense contractors, and plays an integral role for the U.S. military.
- Unprecedented geopolitical risks will ensure Lockheed Martin's success for years to come.
- The increasingly technologically sophisticated nature of warfare will lead to high-tech defense contractors, such as Lockheed Martin, taking a larger role in global security.
- Lockheed Martin's international diversification is a wise move in light of escalating global conflicts.
Lockheed Martin: An Analysis Using The Capital Asset Pricing Model
- I use the Capital Asset Pricing Model to illustrate the risk-return characteristics of Lockheed Martin (LMT) during a period of market upturn and a period of market downturn.
- The analysis shows that Lockheed Martin is among the best performers during periods of market upturn, while being the greatest under performer of the S&P 500 during market downturns.
- However, I believe Lockheed Martin's impressive characteristics as a dividend stock will continue to be of appeal to long-term investors despite defense spending cuts.
Lockheed Martin Looks To International Markets To Fuel Growth
- Revenue growth from the US, which accounts for 81.25% of the company’s revenues, expected to decline as the government slashed 20% off its previous war fund budget.
- Middle Eastern defense spending is expected to decline in the near term as oil prices sustain themselves at levels lower than required for the defense budgets to break even.
- The Asia Pacific region shows signs of promising growth in the near term, which provides Lockheed with a region to focus more on to combat declining revenues.
- Revenue will continue its downward trend this year, and will fall by a single low digit rate, according to the company’s expectations.
- The stock of the company is a good investment based on the company’s potential for earnings growth, strong history of dividend increases and certainty in earnings outlook.
- This article compares three large cap aerospace and defense companies that each offer strong dividends: Lockheed Martin, Northrop Grumman and Raytheon.
- Although it trades at the most expensive valuation of the group, Lockheed Martin offers the highest projected future earnings growth and analysts are fairly consistent in their earnings predictions.
- Each of these companies has increased their dividend by at least 40% during the past three years.
- Lockheed Martin seemingly represents the most compelling investment in the aerospace and defense sector for income and dividend growth focused investors.
Update: Lockheed Martin's $4.7 Billion Deal For F-35s
- $4.7 billion contract has been awarded to Lockheed Martin for 43 F-35s.
- Consistently winning new contracts, even though the defense budget is facing reductions, is a positive sign for the company.
- The stock is recommended investment for short term.
Lockheed Martin: Great Stock But Patience Required
- LMT is an outstanding company with a wide moat that has greatly outperformed the market in almost every time horizon one can test.
- However, due to the restricted budget of the Department of Defense, its annual EPS growth has pronouncedly decreased, from about 30% during 2004-2008 to just 3% since then.
- Moreover, its P/E has greatly expanded, from 9-11 during 2008-2012 to a decade-high of 19 currently. Therefore, the upside potential of the stock is limited.
Lockheed Martin Changes Rules, So This Dividend Growth Investor Drops DRiP
- LMT is adding numerous fees to its direct reinvestment plan.
- LMT is a great company but it is overvalued.
- I am bailing from the DRiP and will have to decide if I want to keep LMT at all.
Building A Core Investment Portfolio For The Next 20 Years: Lockheed Martin
- Building a core investment portfolio is key to any investment strategy.
- Lockheed Martin has operated successfully in a variety of core businesses with high barriers to entry, and has consistently returned value to shareholders, making it an ideal core holding.
- Historical performance, innovation, high barriers to entry, returning value to shareholders and being a best-of-breed are all essential for qualifying as a core holding.
- Third quarter results for 2014 indicated that Lockheed Martin’s net sales had declined relative to last year’s results.
- Lockheed Martin believes that the decline in revenues is due to fewer contracts being received by the US government. It also anticipates fewer contracts in the next year.
- In order to restore investor confidence, the company has planned share buy backs of $1 billion annually for the next three years.
- It has recently signed a $4 billion deal with Pentagon for supplying another batch of F-35 fighter jets, along with a deal with a missile manufacturing company in Turkey.
- The shares offer a yield of 3.31%, which is the highest in the industry. Shares currently trade at 18.34 times its earnings.
Is High Yielding Lockeed Martin The Way To Invest In The Aerospace Industry?
- The stock appears to be fairly valued based on 2015 earnings estimates but has little earnings growth potential.
- The dividend is solid at 3.15% but doesn't have much room to grow right now.
- I'm going to take a pass on this name and continue to search for a better name in the industry.
- Lockheed Martin reported mixed financial results in its half yearly earnings release. While profits for the company increased, revenues for most of its segments experienced declines.
- In order to capitalize on the high volume demand for F35 jets, the company continues to develop the project further.
- The company is already involved in a contract with the US Military and DoD to supply jets to the agencies. Another contract seems to be underway as well.
- The company also signed a new contract with South Korea recently, to supply them with 40 F35 planes.
- Share prices have remained bullish in the market over the past six months and the trend should continue as the company continues to invest in long term growth prospects.
Update: Lockheed Martin Beats EPS Estimate, Raises FY 2014 Guidance
- Lockheed Martin reported revenues of $11.1 billion (-2.2% yoy) and EPS of $2.76 (+7.4% yoy).
- Lockheed Martin raised its FY 2014 guidance: EPS guidance is $11.15 (up from $10.85 - $11.15).
- I had forecasted earnings per share growth in my original article.
- I remain with my original conclusion: Lockheed Martin offers earnings per share growth and a compelling dividend.
- Lockheed Martin reported mixed Q314 earnings.
- Investors should sell the stock with limited upside from these levels.
- The original investment thesis anticipated that the stock could start facing issues with lower capital returned to shareholders due to the higher stock prices.
- The company has been looking to diversify revenue streams in wake of decreased national defense budgets.
- Earnings are expected to rise in spite of aviation development issues.
- Development of new compact nuclear fusion reactor could indicate new directions for company.
- Lockheed Martin stated that it achieved a breakthrough in developing a compact nuclear fusion reactor technology.
- The reactor can be “developed and deployed” in as little as ten years.
- A test version of the reactor may be ready already in a year.
- Volatility in world markets has been fueled by rising political tensions and investors feel there is an urgent need to find low beta, high cap stocks as safe investments.
- Lockheed Martin could fit the bill perfectly and it does represent itself as a safe investment.
- Lockheed Martin announced a new annual dividend of $6 per share, investors will now have a current yield of 3.4%. Their payout ratio is currently 61%, which might prove handy.
- Now would be an ideal time to invest as prices are low, and are expected to follow an upward trend.
- Lockheed Martin increased the quarterly dividend by 13% to $1.50.
- The BOD authorized a $2 billion share buyback program.
- These capital return plans make for an interesting comparison to recent buybacks and dividend yields.
Oct. 24, 2014, 2:05 AM
- Lockheed Martin (NYSE:LMT) and U.S. defense officials have reached agreement on the terms of a contract worth about $4B for an eighth batch of 43 F-35 fighter jets, Reuters reports.
- The new contract lowers the cost of the jets by about 3%,
- Both sides had expected to reach a deal early in the summer, but negotiations slowed after an engine failure in June grounded the entire F-35 fleet for weeks.
- LMT +0.6% premarket
Oct. 21, 2014, 8:07 AM
- Lockheed Martin (NYSE:LMT) reports a Q3 net profit of $888M, or $2.76 per diluted share vs. $842M, or $2.57 per diluted share; revenues fell 2% to $11.1B.
- Q3 2014 net earnings include FAS/CAS pension income of $84M, which increased net earnings by $52M, or $0.16 per diluted share.
- Cash from operations of $990M vs. $900M in the third quarter of 2013.
- Operating margins edged lower at each of the company's five divisions in the quarter, with the trend most noticeable in the aeronautics sector, which builds the F-35 fighter jet. The division reported a 12% drop in earnings to $362M, and its operating margin fell to 10.2% from 11.3%.
- Q3 results
- LMT -1.6% premarket
Jun. 16, 2014, 1:47 AM
- After a a Marine Corps Lockheed Martin (LMT) F-35B model experienced an in-flight emergency last week, the U.S. military has ordered mandatory inspections on all F-35 fighter jets before any further flights.
- The issue relates to the engine's oil flow management valve fitting, built by Pratt & Whitney (UTX).
- LMT -0.02% AH
- UTX -0.12% AH
Apr. 22, 2014, 2:24 PM
- Lockheed Martin (LMT -1.7%) says its Q1 operating margin reached 13.4%, easily ahead of 12.1% in the year-ago quarter, but it would be hard to maintain that level in coming years.
- CFO Bruce Tanner told analysts in this morning's earnings call that the growing importance of the F-35 fighter jet program, which accounts for ~16% of LMT's overall revenues but generates narrower margins, meant it would be hard to keep operating margins above 13% in coming years.
- Tanner expects additional F-35 orders from Australia, South Korea, Israel and Singapore, but he did not expect those orders to close in 2014; the F-35 program likely would account for ~25% of LMT's overall revenue by 2018 or 2019, when it reaches full rate production.
Feb. 24, 2014, 2:58 PM
- The Pentagon announces plans to shrink the U.S. Army to pre-WW II levels - to fewer than 450K from the current 520K - in order to meet 2015 spending caps.
- Also planned for elimination is the Air Force's fleet of A-10 Warthog close air support planes - a change some influential lawmakers are expected to oppose - to ensure continued funding of Lockheed Martin's (LMT +1.7%) new long-range F-35 bomber and a new aerial refueling tanker.
- Nevertheless, top defense stocks are solidly higher, presumably because the Defense Department envisions warfare being waged using enhanced technologies: BA +1.4%, GD +1.5%, NOC +1.9%, RTN +2.2%, HII +0.9%.
Feb. 11, 2014, 12:47 PM
- Ocean Power Technologies (OPTT +40.9%) soars on news of a $205M deal with Lockheed Martin (LMT +2%) to produce the world’s largest wave energy project off the coast of Victoria, Australia.
- Once completed in 2018 or 2019, the project will generate 62.5 MW of peak power, about one-third the capacity of a small coal-fired power plant in the U.S. and enough to meet the needs of 10K homes, LMT says.
- The power buoys to be used in the project will rise ~30 ft. out of the water, far smaller than wind turbines which are typically 130 ft. tall and have drawn public resistance.
- The agreement is part of a drive by defense giant LMT to expand its foothold in alternative energy as it seeks to offset a slump in U.S. and European military budgets.
Jan. 7, 2014, 9:00 AM
Oct. 22, 2013, 7:48 AM
- Lockheed Martin's (LMT) net rises 16% Y/Y even as revenue falls 5%.
- FY13 outlook: Revenue of $45B (previous guidance of $44.5-46B). EPS of $9.40-9.70 (previous guidance of $9.20-9.50).
- Revenue by segment: Aeronautics, -1.7%; Information Systems & Global Solutions, -10%; Missiles and Fire Control, +2.6%, and Mission Systems and Training, -8.8%, Space Systems, -5.3%.
- FY14 commentary: LMT "expects 2014 net sales will decline slightly from 2013 [and] the preliminary outlook for 2014 assumes all impacts known to [the company] associated with sequestration [but] changes in circumstances may require revisions [to] assumptions, which could materially reduce 2014 net sales and earnings trends." (PR)
- LMT +1.6% premarket
Oct. 10, 2013, 7:51 AM
- The U.S. Air Force expects to finalize a $2.2B contract with Lockheed Martin (LMT) for two more advanced military communications satellites in coming weeks, a top general tells Reuters.
- The Air Force awarded LMT a preliminary contract worth $1.9B in December for the fifth and sixth AEHF satellites, which allowed the company to begin work on the new spacecraft; the new contract would finalize the terms of that agreement.
- A LMT executives says the new contract would reduce costs by at least 35% vs. the previous satellite.
- LMT +1.6% premarket.
Sep. 20, 2013, 1:19 PM| Comment!
Aug. 23, 2013, 12:23 PM| Comment!
May. 30, 2013, 7:53 AMGoldman is out with upgrades for the defense contractors: Northrop Grumman (NOC) is taken to Buy from Neutral (PT, $95) as it transitions to "a consistent performer with above average margins" and is now "arguably the most shareholder-friendly defense prime" (I, II); Lockheed Martin (LMT) is "in the sweet spot of Pentagon priorities" and lands on the coveted Conviction Buy list with a PT of $127; Raytheon (RTN) gets a Neutral from Sell bump (PT, $70) as Goldman "underestimated the multiple the market would pay for cash generation and dividend yield." LMT +2% premarket, NOC +1.34% premarket. | 3 Comments
May. 17, 2013, 12:43 PMJPMorgan lifts its price target ($70 from $68) on Northrop Grumman (NOC +3.6%) to reflect Thursday's announcement that the company plans to reduce the number of outstanding shares by 25% by 2015. More interesting is the color in the note regarding NOC's position relative to peers: the company "intends to return essentially all cash to shareholders. Besides LMT's nearly 50% payout ratio (which we believe is likely to rise still higher in September), this is the clearest multi-year strategic statement we have seen among large defense companies, and we think the market will reward this," notes analyst Joseph Nadol III. | 1 Comment
Apr. 25, 2013, 1:01 PMLockheed Martin (LMT +0.7%) could receive U.S. military orders for up to 60 F- 35 jets whose price tag could reach a as high as $9B. The number could rise to as many as 71 if orders from other nations are included. The deal is targeted to be signed as early as June, after months of tense and oftentimes confrontational wrangling over the program's costs. | 2 Comments
Apr. 23, 2013, 10:53 AMMore on Lockheed Martin (LMT +2.2% to $98.01) Q1: net profit +13.9% to $761M, helped by lower tax expenses but hurt by special items of $151M. Sales breakdown: aeronautics -14% to $3.19B, partly because of lower F-16 deliveries; Missiles & Fire Control +13% to $1.99B; Space Systems +4% to $1.96B. Affirms 2013 EPS outlook of $8.80-9.10 vs consensus of $8.92, but says revenue will be at lower end of projection of $44.5-46B vs consensus of $45.12B, with sequestration to slice $825M off the figure. Drexel Hamilton upgrades LMT to Buy from Hold and gives it a price target of $110 vs $90 previously. | 1 Comment
Apr. 18, 2013, 3:31 PM
LMT vs. ETF Alternatives
Lockheed Martin Corp is a security and aerospace company engaged in the research, design, development, manufacture, integration, and sustainment of advanced technology systems and products.
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