- 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.
Tue, Jan. 20, 4:56 PM
- The U.S. Air Force will re-evaluate proposals received in a competition for a long-range radar system initially won by Raytheon (NYSE:RTN) after losing bidders Lockheed Martin (NYSE:LMT) and Northrop Grumman (NYSE:NOC) filed protests, Reuters reports.
- It is unclear how long the re-evaluation of the bids would take, but Reuters says one source indicated it could include a more technical assessment of proposals submitted by the companies.
- RTN in October beat out LMT and NOC to develop a replacement for the Air Force's current TPS-75 radar, which has been in service since the late 1960s.
Tue, Jan. 20, 9:45 AM
Fri, Jan. 16, 8:03 AM
- Lockheed Martin's (NYSE:LMT) F-35 B-model is making good progress and should meet the Marine Corp's July target date for initial combat use, said Navy Secretary Ray Mabus yesterday at the annual conference of the Surface Navy Association.
- Separately, Air Force Chief of Staff General Mark Welsh told a news conference at the Pentagon that he was confident the Air Force would meet its target date of declaring the F-35 A-model combat ready by August to December 2016.
Thu, Jan. 8, 2:15 PM
- The Pentagon will request ~$51B in war funding for the next fiscal year starting Oct. 1, 20% less than the $64B Congress approved this year and the lowest since the 2001 terrorist attacks, Bloomberg reports.
- The Overseas Contingency Operations funding will be sent to Congress in addition to basic defense spending of ~$534B when Pres. Obama offers his proposed FY 2016 federal budget on Feb. 2, according to unnamed government officials and congressional aides.
- Related stocks: BA, NOC, LLL, LMT, GD, RTN, FLIR, KTOS, COL.
Wed, Jan. 7, 9:32 AM
- The U.S. Army has awarded Lockheed Martin (LMT +0.7%) a $78 contract for upgrades to the Army Tactical Missile System.
- The program will take hardware from early-production ATACMS Block 1 missiles and develop an enhanced and affordable weapon system capable of eliminating targets without the risk of unexploded ordnance.
Dec. 23, 2014, 7:19 AM
- Lockheed Martin (NYSE:LMT) met its target of delivering 36 F-35 fighter jets to the U.S. government in 2014, paving the way for the firm to collect most of the associated performance fees, a spokesman for the Pentagon's F-35 program office said.
- The company accelerated deliveries in the final months of the year to achieve the objective.
- LMT +1.2% premarket
Dec. 15, 2014, 10:05 AM| Comment!
Dec. 15, 2014, 8:39 AM
- The lawsuit filed eight years ago claims Lockheed Martin's (NYSE:LMT) in-house investment manager mismanaged retirement benefits, subjecting workers to excessive fees and under-delivering on performance.
- "Lockheed Martin’s position has remained constant and we believe that all allegations of improper management of our 401(k) savings plans are false," said company spokeswoman Jennifer Allen.
- Lockheed’s retirement plans serve about 120K employees and retirees and manages $26B in assets.
Dec. 11, 2014, 10:06 AM
- Poland has purchased 40 Lockheed Martin (LMT +0.8%) joint air-to-surface missiles, which will be integrated into the country's F-16 air force fleet.
- "Never in history have we had such modern weapons," says Poland's defense minister Tomasz Siemoniak. "At such a difficult time such modern weaponry is especially needed."
- The U.S. State Department approved the deal in October.
Dec. 10, 2014, 7:18 AM
- The $1.1T spending bill agreed to last night by lawmakers from the U.S. House and Senate provides $554.2B in funding for the U.S. military in fiscal 2015, including $1.46B for 15 EA-18G electronic attack jets built by Boeing (NYSE:BA).
- The measure also includes $479M for a total of four extra Lockheed Martin (NYSE:LMT) F-35s for the U.S. Air Force and Navy.
- $341M in additional funding was also added to the measure for upgrades of up to 12 AH-64 Apache helicopters built by Boeing, and 9 Black Hawk helicopters built by Sikorsky Aircraft (NYSE:UTX).
Dec. 9, 2014, 10:44 AM
- Northrop Grumman (NOC -0.2%) has been selected by Lockheed Martin (LMT -0.6%) to supply its space inertial reference system for the U.S. Air Force Space-Based Infrared System's fifth Geosynchronous Earth Orbit satellite.
- The SBIRS program delivers early warning of ballistic missile launches, missile defense and technical intelligence.
Dec. 4, 2014, 5:55 PM
- Northrop Grumman (NYSE:NOC) +1.4% AH on news that its board authorized the repurchase of an additional $3B in stock, as it aims to buy back a quarter of its shares by the end of next year.
- NOC increased its stock buybacks during Q3 to $753M as it continued with the most aggressive repurchase plan in the defense contracting sector.
- L-3 Communications (NYSE:LLL) also says its board authorized the repurchase of an additional $1.5B in shares over the next two and a half years.
- In October, Lockheed Martin (NYSE:LMT) announced a plan to boost stock buybacks.
Dec. 1, 2014, 7:00 AM
- Israel is staggering the purchase of its second batch of Lockheed Martin (NYSE:LMT) F-35s, which would have saw it acquire 31 fighter jets over the next three years.
- Under a new compromise plan approved by the ministerial committee, Israel will buy 14 of the aircraft now and another 17 in 2017.
- The second stage of the purchase will be subject to another vote of approval.
- Previously: Israel likely to trim second order of F-35s
- Previously: Israel places preliminary order for 25 more F-35s
Nov. 28, 2014, 7:09 AM
- The DoD has awarded Lockheed Martin (NYSE:LMT) three contracts with a total value of $626.3M.
- Two of the awards were by the U.S. Navy, including a $492M contract to support F-35 Lightning II Joint Strike Fighter aircraft and a $64.3M contract for modification work on some F-35A air vehicles.
- A third $70M was awarded by the U.S. Air Force to work on extremely high frequency systems needed for planning defense missions.
Nov. 24, 2014, 3:43 PM
- Twenty-two spinoffs have been completed in 2014, the most in a decade, and another 28 have been announced. Among the catalysts are activist investors, so Credit Suisse screened for companies with multiple business segments, slow growth, and stocks trading for lower multiples than peers, in other words, "good, quality companies that are struggling to grow."
- The list is heavy on big media names like Time Warner (NYSE:TWX) and Twenty-First Century Fox (NASDAQ:FOXA), big tech like Oracle (NYSE:ORCL), Symantec (NASDAQ:SYMC), and IBM, and big industry like Lockheed Martin (NYSE:LMT), Ingersoll-Rand (NYSE:IR), and Raytheon (NYSE:RTN), but just two financial names - Travelers (NYSE:TRV) and Torchmark (NYSE:TMK).
- The rest: MO, CA, WU, DPS, PBI, SJM, HRS, SWK, EMR, WLP, MAT, GE, SNA, LLL, ITW, STJ, PDCO, HPQ, DLPH, HAS, NAVI, GME, CBS, JNJ, SLB.
Nov. 24, 2014, 10:17 AM
- After winning a $4.7B F-35 contract from the DoD on Friday, Lockheed Martin (LMT +0.2%) has received an order from Britain's Ministry of Defense for four more F-35 Lightning II stealth fighter jets.
- In October, the MoD said it had reached an agreement in principle to order the stealth fighters, part of a plan to purchase 14 over the next five years.
- The aircraft are due to be delivered from mid-2016.
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.
Other News & PR