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Will Lockheed Martin (LMT) Continue Strong Earnings Growth in Q2?
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Lockheed Martin (LMT - Free Report) is set to report its fiscal 2019 second quarter earnings this week. The aerospace company has been able to see some sound growth this year, and shares are up 36.4% year-to-date. Lockheed is coming off a solid first quarter where it was able to report strong year over year growth. The broader aerospace defense sector has risen 24% this year and has been able to provide solid returns for investors. The overall success of the sector could bring investors flocking to companies like Lockheed if they can post another solid quarterly report. Let’s take a look at the company and what to expect from them this earnings season.
Company Overview
Lockheed Martin is the largest defense contractor in the world with its main area of focus being in defense, space, intelligence, homeland security, and information technology. The defense contractor directly benefits from the United States’ high defense expenditures. In 2018, 70% of the company’s net sales were from the U.S. government, 60% of which were from the Department of Defense. Furthermore, 28% of its sales were from international customers and the remaining 2% was from U.S. commercial and other consumers. Lockheed operates its business in four segments: Aeronautics, Missiles and Fire Control, Rotary and Missions Systems, and Space Systems.
Solid demand growth for the company’s many different defense products has been a catalyst for Lockheed’s success. The company’s F-35 program continues to be a primary growth driver for the defense contractor. The U.S. government is currently setting an inventory target of 2,456 fighter jets for the Air Force, Marine Corps, and Navy. In response to the U.S’ intentions, Lockheed Martin has been consistently increasing the production of its F-35 aircrafts. In late June, Lockheed Martin received a new contract to produce missiles for the U.S. as well other certain foreign militaries. The company announced that it would be producing Army Tactical Missile System missiles under the $561.8 million contract.
Q2 Outlook
In the first quarter of 2019, Lockheed Martin reported $14.3 billion in revenue with earnings of $5.99 per share, which was a 49% jump from Q1 2018. LMT was able to surpass our Consensus Earnings Estimates by 39.63% and revenue estimates by 13.4%. The company returned $920 million of cash back to shareholders, including repurchasing one million shares for $280 million.
LMT’s Aeronautics segment generated $5.6 billion in Q1 for a 27% year-over-year increase and the Rotary and Mission Systems reported $3.8 billion. The Missiles and Fire Control sector produced $2.4 billion for a 40% surge from the year ago quarter and the Space segment attributed $2.6 billion. In addition, the Missiles and Fire Control sector generated $417 million in profit, which was a 60% surge from Q1 2018 and was the second most profitable sector behind Aeronautics.
Our Consensus Estimates are currently forecasting Lockheed to bring in $14.2 billion in revenue in Q2 for a 5.67% increase; earnings are projected to jump 9.98%. Consensus Estimates are also looking for the Aeronautics segment to increase 7.1% year over year with $5.7 billion and for the Space segment to bring in $2.5 billion.
In addition, Consensus Estimates are anticipating the Missiles and Fire Control segment to continue its success in Q2 with a projected $2.4 billion for a 15.6% spike from Q2 2018. Rotary and Mission Systems is estimated to bring in $3.6 billion in revenue this quarter, and the Aeronautics sector is expected to lead the pack again with $610 million in profit; the Missiles and Fire Control segment should come in second with $329 million.
Takeaway
Lockheed Martin is currently sitting at a Zacks Rank #1 (Strong Buy) with a Style Score of B in Growth. The U.S. government’s inventory target for its military’s aircraft could help Lockheed post solid delivery figures in Q2, which can in turn boost the company’s Aeronautics top line this quarter. The F-35 program was a large contributor to the Aeronautics segment’s success in Q1, and the inventory target can propel the success into Q2.
In May of 2019, a senate committee approved allocating $750 billion for defense spending as part of a budget bill. This authorization from the government to allocate further expenditures into defense can cement success for companies like Lockheed for the remainder of the year.
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Will Lockheed Martin (LMT) Continue Strong Earnings Growth in Q2?
Lockheed Martin (LMT - Free Report) is set to report its fiscal 2019 second quarter earnings this week. The aerospace company has been able to see some sound growth this year, and shares are up 36.4% year-to-date. Lockheed is coming off a solid first quarter where it was able to report strong year over year growth. The broader aerospace defense sector has risen 24% this year and has been able to provide solid returns for investors. The overall success of the sector could bring investors flocking to companies like Lockheed if they can post another solid quarterly report. Let’s take a look at the company and what to expect from them this earnings season.
Company Overview
Lockheed Martin is the largest defense contractor in the world with its main area of focus being in defense, space, intelligence, homeland security, and information technology. The defense contractor directly benefits from the United States’ high defense expenditures. In 2018, 70% of the company’s net sales were from the U.S. government, 60% of which were from the Department of Defense. Furthermore, 28% of its sales were from international customers and the remaining 2% was from U.S. commercial and other consumers. Lockheed operates its business in four segments: Aeronautics, Missiles and Fire Control, Rotary and Missions Systems, and Space Systems.
Solid demand growth for the company’s many different defense products has been a catalyst for Lockheed’s success. The company’s F-35 program continues to be a primary growth driver for the defense contractor. The U.S. government is currently setting an inventory target of 2,456 fighter jets for the Air Force, Marine Corps, and Navy. In response to the U.S’ intentions, Lockheed Martin has been consistently increasing the production of its F-35 aircrafts. In late June, Lockheed Martin received a new contract to produce missiles for the U.S. as well other certain foreign militaries. The company announced that it would be producing Army Tactical Missile System missiles under the $561.8 million contract.
Q2 Outlook
In the first quarter of 2019, Lockheed Martin reported $14.3 billion in revenue with earnings of $5.99 per share, which was a 49% jump from Q1 2018. LMT was able to surpass our Consensus Earnings Estimates by 39.63% and revenue estimates by 13.4%. The company returned $920 million of cash back to shareholders, including repurchasing one million shares for $280 million.
LMT’s Aeronautics segment generated $5.6 billion in Q1 for a 27% year-over-year increase and the Rotary and Mission Systems reported $3.8 billion. The Missiles and Fire Control sector produced $2.4 billion for a 40% surge from the year ago quarter and the Space segment attributed $2.6 billion. In addition, the Missiles and Fire Control sector generated $417 million in profit, which was a 60% surge from Q1 2018 and was the second most profitable sector behind Aeronautics.
Our Consensus Estimates are currently forecasting Lockheed to bring in $14.2 billion in revenue in Q2 for a 5.67% increase; earnings are projected to jump 9.98%. Consensus Estimates are also looking for the Aeronautics segment to increase 7.1% year over year with $5.7 billion and for the Space segment to bring in $2.5 billion.
In addition, Consensus Estimates are anticipating the Missiles and Fire Control segment to continue its success in Q2 with a projected $2.4 billion for a 15.6% spike from Q2 2018. Rotary and Mission Systems is estimated to bring in $3.6 billion in revenue this quarter, and the Aeronautics sector is expected to lead the pack again with $610 million in profit; the Missiles and Fire Control segment should come in second with $329 million.
Takeaway
Lockheed Martin is currently sitting at a Zacks Rank #1 (Strong Buy) with a Style Score of B in Growth. The U.S. government’s inventory target for its military’s aircraft could help Lockheed post solid delivery figures in Q2, which can in turn boost the company’s Aeronautics top line this quarter. The F-35 program was a large contributor to the Aeronautics segment’s success in Q1, and the inventory target can propel the success into Q2.
In May of 2019, a senate committee approved allocating $750 billion for defense spending as part of a budget bill. This authorization from the government to allocate further expenditures into defense can cement success for companies like Lockheed for the remainder of the year.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
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