With equity markets coming on strong after Monday’s rough session, there are several names which could be today’s Bull of the Day. This one happens to be in the Aerospace – Defense industry which ranks in the Top 37% of our Zacks Industry Rank. I’m talking about Zacks Rank #1 (Strong Buy) Lockheed Martin (LMT - Free Report) .
Lockheed Martin Corporation, a security and aerospace company, engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. It operates through four segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS), and Space.
The reason for the favorable Zacks Rank lies in the earnings estimates for the current year and next year. Over the course of the last sixty days, analysts have increased their earnings estimates for both these time periods. The bullish sentiment has pushed up our Zacks Consensus Estimate for the current year from $17.02 to $17.51. Next year’s number has gone from $18.97 to $19.49.
If you look at the Price, Consensus and EPS Surprise Chart, you can see that there’s been divergence between the stock price and the earnings estimates. This divergence could lead to outperformance in Lockheed over the next several months. With price coming down as estimates go up, forward valuations are on the move lower. Currently, Lockheed is trading at 12.92x forward 12-month earnings estimates. Lockheed hasn’t traded at a multiple that low since 2012.
The 52-week high of $363 is a far cry from the current price of $259.79. The 200-day moving average is all the way up at $317.93, providing plenty of topside resistance should the stock stage a serious rally. Before that, the 50-day moving average is at $296.61.
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