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Will Contract Wins Aid Lockheed Martin's (LMT) Q3 Earnings?
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Lockheed Martin Corporation (LMT - Free Report) is set to release third-quarter 2017 results on Oct 24, before the opening bell.
We believe order procurement to be a primary growth driver for this defense bellwether’s upcoming third-quarter results. On the other hand, segment operating profit is expected to reflect conflicting numbers in the quarter.
Let's have a detailed look at the factors influencing Lockheed Martin’s quarterly results.
Slew of Contract Wins — Key Catalyst
Being the largest defense contractor in the United States, Lockheed Martin enjoys a solid inflow of contracts from both Pentagon as well as foreign allies, courtesy of its varied military product offerings.
Among the contracts this defenese major won in the third quarter, the significant ones include a $3.8 billion foreign military sales (FMS) deal for multi-year production of Black Hawk helicopters, a contract worth $409 million for Next Generation Thermal, Power, and Controls (NGT-PAC) program and a modification contract worth $5.6 billion to offer low-rate initial production (LRIP) of the 11th lot of F-35 Lightening II Joint Strike Fighter.
The company also won the Aerospace Systems Air Platform Technology Research program contract worth $499 million, another deal worth $900 million for the replacement of the AGM-86B air-launched cruise missile and a modification contract worth $548 million to support production requirement of a Hellfire II missile.
It goes without saying that such steady inflow of orders will surely boost Lockheed Martin’s quarterly sales. Evidently, the Zacks Consensus Estimate for the company’s Q3 sales growth is pegged at $12.83 billion, reflecting year-over-year growth of 11.04%.
Lockheed Martin Corporation Price and EPS Surprise
During its second-quarter earnings call, Lockheed Martin raised its total segment operating profit for 2017, citing improved expectations for Aeronautics business unit, for the remaining year. Our consensus estimate also predicted numbers in line with this expectation. Thus this segment’s operating profit is now expected to be $535 million, up 23.8% year over year.
However, the consensus estimate for the Space Systems business unit reflects an annual decline of 11.8% to $224 million, in contrast to an improved number expected by the company.
Other Factors at Play
Segment-wise each of Lockheed Martin’s segments has positive sales growth expectation, in line with what management hinted last quarter. Our consensus estimate showed notable sales growth in all the three segments of Lockheed Martin in the third quarter.
However in terms of bottom-line growth, expectations are not so bright for the yet-to-be-reported quarter. For the quarter, the Zacks Consensus Estimate for earnings is $3.25 per share, down 9.9% year over year. Moreover, this estimate has declined by a couple of cents in past 60 days.
Earnings Whispers
Our proven model does not conclusively show that Lockheed Martin is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.
Zacks ESP: Lockheed Martin has an Earnings ESP of -0.68%. This is because the Most Accurate estimate is pegged at $3.23, lower than the Zacks Consensus Estimate of $3.25. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Lockheed Martin carries a Zacks Rank #4 (Sell).
Please note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some defense companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
General Dynamics Corp. (GD - Free Report) is expected to report quarterly results on Oct 25. The company has an Earnings ESP of +0.04% and a Zacks Rank #3.
Huntington Ingalls Industries, Inc. (HII - Free Report) is expected to report quarterly results on Nov 8. The company has an Earnings ESP of +1.62% and a Zacks Rank #2.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Will Contract Wins Aid Lockheed Martin's (LMT) Q3 Earnings?
Lockheed Martin Corporation (LMT - Free Report) is set to release third-quarter 2017 results on Oct 24, before the opening bell.
We believe order procurement to be a primary growth driver for this defense bellwether’s upcoming third-quarter results. On the other hand, segment operating profit is expected to reflect conflicting numbers in the quarter.
Let's have a detailed look at the factors influencing Lockheed Martin’s quarterly results.
Slew of Contract Wins — Key Catalyst
Being the largest defense contractor in the United States, Lockheed Martin enjoys a solid inflow of contracts from both Pentagon as well as foreign allies, courtesy of its varied military product offerings.
Among the contracts this defenese major won in the third quarter, the significant ones include a $3.8 billion foreign military sales (FMS) deal for multi-year production of Black Hawk helicopters, a contract worth $409 million for Next Generation Thermal, Power, and Controls (NGT-PAC) program and a modification contract worth $5.6 billion to offer low-rate initial production (LRIP) of the 11th lot of F-35 Lightening II Joint Strike Fighter.
The company also won the Aerospace Systems Air Platform Technology Research program contract worth $499 million, another deal worth $900 million for the replacement of the AGM-86B air-launched cruise missile and a modification contract worth $548 million to support production requirement of a Hellfire II missile.
It goes without saying that such steady inflow of orders will surely boost Lockheed Martin’s quarterly sales. Evidently, the Zacks Consensus Estimate for the company’s Q3 sales growth is pegged at $12.83 billion, reflecting year-over-year growth of 11.04%.
Lockheed Martin Corporation Price and EPS Surprise
Lockheed Martin Corporation Price and EPS Surprise | Lockheed Martin Corporation Quote
Operating Profit: A Mixed Bag
During its second-quarter earnings call, Lockheed Martin raised its total segment operating profit for 2017, citing improved expectations for Aeronautics business unit, for the remaining year. Our consensus estimate also predicted numbers in line with this expectation. Thus this segment’s operating profit is now expected to be $535 million, up 23.8% year over year.
However, the consensus estimate for the Space Systems business unit reflects an annual decline of 11.8% to $224 million, in contrast to an improved number expected by the company.
Other Factors at Play
Segment-wise each of Lockheed Martin’s segments has positive sales growth expectation, in line with what management hinted last quarter. Our consensus estimate showed notable sales growth in all the three segments of Lockheed Martin in the third quarter.
However in terms of bottom-line growth, expectations are not so bright for the yet-to-be-reported quarter. For the quarter, the Zacks Consensus Estimate for earnings is $3.25 per share, down 9.9% year over year. Moreover, this estimate has declined by a couple of cents in past 60 days.
Earnings Whispers
Our proven model does not conclusively show that Lockheed Martin is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.
Zacks ESP: Lockheed Martin has an Earnings ESP of -0.68%. This is because the Most Accurate estimate is pegged at $3.23, lower than the Zacks Consensus Estimate of $3.25. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Lockheed Martin carries a Zacks Rank #4 (Sell).
Please note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some defense companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
General Dynamics Corp. (GD - Free Report) is expected to report quarterly results on Oct 25. The company has an Earnings ESP of +0.04% and a Zacks Rank #3.
Leidos Holdings, Inc. (LDOS - Free Report) is expected to report quarterly results on Nov 2. The company has an Earnings ESP of +3.75% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Huntington Ingalls Industries, Inc. (HII - Free Report) is expected to report quarterly results on Nov 8. The company has an Earnings ESP of +1.62% and a Zacks Rank #2.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>