Back to top

Image: Bigstock

Will Segmental Growth Boost Lockheed's (LMT) Q2 Earnings?

Read MoreHide Full Article

Lockheed Martin Corporation (LMT - Free Report) is slated to release second-quarter 2021 results on Jul 26, before the opening bell.

Solid sales performance across the segments is expected to have generated significant growth for the company’ in the soon-to-be-reported quarter.  Favorable contributions from the company’s latest investment in ventures fund must have bolstered its earnings growth in the second quarter.

Let's see how things have shaped up prior to this announcement.

Aeronautics a Key Catalyst

The Aeronautics segment, which primarily manufactures advanced, combat-proven jets and comprises almost 40% of the company’s top line, is expected to have once again acted as a major growth catalyst. Lockheed Martin has a history of delivering a significant number of military jets every quarter. We expect a similar trend in the yet-to-be-reported quarter as well. This should get reflected in the form of solid top-line growth for the Aeronautics business division.

The Zacks Consensus Estimate for this unit’s revenues stands at $6,852 million, indicating a 5.4% improvement from the prior-year reported figure.

MFC Unit: Another Growth Driver

We expect Lockheed Martin’s Missiles and Fire Control (MFC) segment, which provides critical missile defense support to the United States and foreign allies, to have also delivered a strong operational performance in the soon-to-be-reported quarter.

In particular, significant deliveries of guided multiple launch rocket systems (GMLRS), as well as strong demand for PAC-3 along with solid production volume in Tactical Strike Missiles and air & missile defense lines of business is expected to have boosted the MFC unit’s top-line performance in the second quarter.

The Zacks Consensus Estimate for MFC segment revenues is currently pegged at $2,933 million, implying a 4.7% increase from the year-ago reported figure.

Q2 Expectations

Solid revenue growth in each of the company’s business segments is likely to have boosted Lockheed’s overall top line in the to-be-reported quarter. The Zacks Consensus Estimate for the company’s second-quarter revenues stands at $16.91 billion, indicating a 4.3% increase from the year-earlier reported figure.

Lockheed’s estimated strong sales performance, which in turn has been boosting its operating profit, along with favorable contributions from the company’s latest investment in ventures fund must have bolstered its Q2 earnings growth. The Zacks Consensus Estimate for the defense giant’s second-quarter earnings is pegged at $6.51 per share, suggesting an increase of 6.2% from the prior-year reported number.

In March 2021, Aerojet Rocketdyne’s shareholders approved its merger agreement with Lockheed, a transaction that Lockheed believes will enhance its ability to develop and supply advanced products along with supporting its national security and civil space objectives. We expect Lockheed to provide an update on this acquisition when it releases second-quarter results.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Lockheed this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Lockheed has an Earnings ESP of +0.92% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Here are a couple of defense companies you may want to consider, as these also have the right combination of elements to post an earnings beat this season:

General Dynamics (GD - Free Report) has an Earnings ESP of +1.98% and a Zacks Rank #3.

Leidos Holdings (LDOS - Free Report) has an Earnings ESP of +4.46% and a Zacks Rank #2.

 


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Lockheed Martin Corporation (LMT) - free report >>

General Dynamics Corporation (GD) - free report >>

Leidos Holdings, Inc. (LDOS) - free report >>

Published in