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Lockheed (LMT) Up 6% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Lockheed Martin (LMT - Free Report) . Shares have added about 6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Lockheed due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Lockheed Martin Q3 Earnings Top Estimates, Sales Miss
Lockheed Martin reported third-quarter 2022 adjusted earnings of $6.87 per share, which surpassed the Zacks Consensus Estimate of $6.58 by 4.4%. The bottom line also improved 4.1% year over year.
The company reported GAAP earnings of $6.71 for the third quarter of 2022, compared with $2.21 in the prior-year quarter.
Our model projected adjusted earnings of $6.71 per share for the third quarter.
Operational Highlights
In the reported quarter, net sales amounted to $16.58 billion, which missed the Zacks Consensus Estimate of $16.82 billion by 1.4%. The top line, however, rose 3.5% from $16.03 billion reported in the year-ago quarter.
Third-quarter revenues came in below our estimate of $16.79 billion.
Backlog
Lockheed Martin ended the third quarter of 2022 (on Sep 25, 2022), with $139.71 billion in backlog compared with $134.64 billion at the end of second-quarter 2022. Of this, the Aeronautics segment accounted for $48.16 billion, while Rotary and Mission Systems contributed $35.03 billion. Meanwhile, Space Systems and the Missiles and Fire Control segments contributed $28.45 billion and $28.08 billion, respectively.
Segmental Performance
Aeronautics: Sales improved 8% year over year to $7.09 billion, primarily driven by higher sales from the F-35 program and classified contracts.
The segment’s operating profit improved 6% year over year to $759 million. The operating margin contracted 20 basis points (bps) to 10.7%.
Missiles and Fire Control: Quarterly sales rose 2% year over year to $2.83 billion due to higher sales from integrated air and missile defense programs.
The segment’s operating profit dropped 8% year over year to $382 million, while the operating margin contracted 140 bps to 13.5%.
Space Systems: Sales increased 7% year over year to $2.88 billion in the third quarter on account of higher sales from strategic and missile defense programs.
The segment’s operating profit increased 14% to $301 million. The operating margin expanded 60 bps to 10.4% in the quarter under review.
Rotary and Mission Systems: Quarterly revenues declined 5% on a year-over-year basis to $3.78 billion. The decrease was primarily due to lower sales for various C6ISR programs and Sikorsky helicopter programs.
The segment’s operating profit dropped 10% to $414 million in the third quarter. The operating margin contracted 60 bps to 10.9% in the reported quarter.
Financial Condition
Lockheed Martin’s cash and cash equivalents totaled $2.43 billion at the end of third-quarter 2022 compared with $3.60 billion at the end of 2021.
Cash from operating activities at the end of third-quarter 2022 amounted to $5.87 billion compared with $4.95 billion a year ago.
Guidance
Lockheed Martin reiterated its financial guidance for 2022.
The company continues to expect 2022 revenues to be $65.25 billion. The Zacks Consensus Estimate for full-year revenues, which is pegged at $65.30 billion, is slightly higher than the company’s guidance.
Earnings per share are still anticipated to be $21.55 for 2022. The Zacks Consensus Estimate for the company’s full-year earnings of $21.65 per share is higher than LMT’s guidance.
Also, the company maintained its free cash flow guidance at $6 billion for 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Lockheed has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Lockheed has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Lockheed (LMT) Up 6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Lockheed Martin (LMT - Free Report) . Shares have added about 6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Lockheed due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Lockheed Martin Q3 Earnings Top Estimates, Sales Miss
Lockheed Martin reported third-quarter 2022 adjusted earnings of $6.87 per share, which surpassed the Zacks Consensus Estimate of $6.58 by 4.4%. The bottom line also improved 4.1% year over year.
The company reported GAAP earnings of $6.71 for the third quarter of 2022, compared with $2.21 in the prior-year quarter.
Our model projected adjusted earnings of $6.71 per share for the third quarter.
Operational Highlights
In the reported quarter, net sales amounted to $16.58 billion, which missed the Zacks Consensus Estimate of $16.82 billion by 1.4%. The top line, however, rose 3.5% from $16.03 billion reported in the year-ago quarter.
Third-quarter revenues came in below our estimate of $16.79 billion.
Backlog
Lockheed Martin ended the third quarter of 2022 (on Sep 25, 2022), with $139.71 billion in backlog compared with $134.64 billion at the end of second-quarter 2022. Of this, the Aeronautics segment accounted for $48.16 billion, while Rotary and Mission Systems contributed $35.03 billion. Meanwhile, Space Systems and the Missiles and Fire Control segments contributed $28.45 billion and $28.08 billion, respectively.
Segmental Performance
Aeronautics: Sales improved 8% year over year to $7.09 billion, primarily driven by higher sales from the F-35 program and classified contracts.
The segment’s operating profit improved 6% year over year to $759 million. The operating margin contracted 20 basis points (bps) to 10.7%.
Missiles and Fire Control: Quarterly sales rose 2% year over year to $2.83 billion due to higher sales from integrated air and missile defense programs.
The segment’s operating profit dropped 8% year over year to $382 million, while the operating margin contracted 140 bps to 13.5%.
Space Systems: Sales increased 7% year over year to $2.88 billion in the third quarter on account of higher sales from strategic and missile defense programs.
The segment’s operating profit increased 14% to $301 million. The operating margin expanded 60 bps to 10.4% in the quarter under review.
Rotary and Mission Systems: Quarterly revenues declined 5% on a year-over-year basis to $3.78 billion. The decrease was primarily due to lower sales for various C6ISR programs and Sikorsky helicopter programs.
The segment’s operating profit dropped 10% to $414 million in the third quarter. The operating margin contracted 60 bps to 10.9% in the reported quarter.
Financial Condition
Lockheed Martin’s cash and cash equivalents totaled $2.43 billion at the end of third-quarter 2022 compared with $3.60 billion at the end of 2021.
Cash from operating activities at the end of third-quarter 2022 amounted to $5.87 billion compared with $4.95 billion a year ago.
Guidance
Lockheed Martin reiterated its financial guidance for 2022.
The company continues to expect 2022 revenues to be $65.25 billion. The Zacks Consensus Estimate for full-year revenues, which is pegged at $65.30 billion, is slightly higher than the company’s guidance.
Earnings per share are still anticipated to be $21.55 for 2022. The Zacks Consensus Estimate for the company’s full-year earnings of $21.65 per share is higher than LMT’s guidance.
Also, the company maintained its free cash flow guidance at $6 billion for 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Lockheed has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Lockheed has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.