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Will Poor Segmental Performance Hit Lockheed's (LMT) Q4 Earnings?
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Lockheed Martin Corporation (LMT - Free Report) is slated to release fourth-quarter and full-year 2023 results on Jan 23, before the opening bell.
The company delivered an average earnings surprise of 4.35% in the last four quarters. Lower sales volume from its major segments, along with lower equity earnings from ULA, is likely to have hurt LMT’s fourth-quarter performance.
Let's see how things might have shaped up prior to the announcement.
Aeronautics to Post Dismal Sales
The Aeronautics segment, which primarily manufactures advanced, combat-proven jets, and contributes almost 40% to the company’s top line, is likely to deliver unimpressive results in the to-be-reported quarter.
Lockheed Martin Corporation Price and EPS Surprise
Higher production volumes for the F-16 and classified programs are expected to have benefited this segment’s performance. However, unfavorable F-35 deliveries are expected due to software maturation with the Tech Refresh 3 program and hardware delivery timing, which is consistent with Lockheed’s latest delivery expectation that is lower than its earlier projection. Such lower F-35 deliveries might have impacted this business unit’s overall sales.
The Zacks Consensus Estimate for the Aeronautics unit’s fourth-quarter revenues is pegged at $7,084.2 million, indicating a 7.2% decline from the prior-year period’s reported figure.
Disappointing Projections From Other Segments
The remaining three segments are also projected to have performed unfavorably in the fourth quarter.
Higher development volume from the next-generation interceptor, as well as Fleet Ballistic Missile and Orion programs, is expected to have benefited the Space business segment’s fourth-quarter performance. However, lower launch volume from the United Launch Alliance (ULA) program might have impacted this unit’s sales results.
The Zacks Consensus Estimate for the segment’s revenues is pinned at $3,163.9 million, indicating a 3.1% decline from the prior-year quarter’s reported number.
Lockheed’s Missiles and Fire Control (MFC) segment provides critical missile defense support to the United States and foreign allies. Within this unit, lower volume from integrated air and missile defense might have hurt sales performance.
The Zacks Consensus Estimate for MFC’s fourth-quarter revenues is currently pegged at $3,202.8 million, indicating a 2.6% decline from the year-ago quarter’s reported figure.
Lower sales volume from Sikorsky helicopter programs might have outweighed higher sales volume from integrated warfare systems and sensors programs, thereby impacting the Rotary and Mission Systems (RMS) segment’s sales in the to-be-reported quarter.
The Zacks Consensus Estimate for the RMS segment’s fourth-quarter revenues is currently pegged at $4,487.1 million, indicating a 6.6% improvement from that registered in the prior-year quarter.
Impressive Delivery Projections
For manufacturing companies like Lockheed, successful delivery of its manufactured goods indicates solid revenue generation. To this end, we notice that our forecast estimates LMT to have delivered 93 jets in the fourth quarter, which indicates year-over-year growth of 6.4%.
Q4 Expectations
The anticipated sales decline in each of LMT’s major segments is likely to have impacted its revenues in the fourth quarter. However, solid delivery expectations might have had some favorable impact on its overall sales performance.
The Zacks Consensus Estimate for the company’s fourth-quarter revenues is pegged at $17.98 billion, indicating a 5.3% decrease from the year-ago quarter’s reported number.
Such a dismal top-line performance, lower equity earnings from ULA, lower segment profit and higher net interest expense are expected to have contributed unfavorably to LMT’s earnings.
The Zacks Consensus Estimate for the defense giant’s fourth-quarter earnings is pinned at $7.26 per share, which implies a deterioration of 6.8% from the prior-year quarter’s reported figure.
What the Zacks Model Unveils
Our proven model does not conclusively predict 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. This is not the case here as you will see below.
LMT has an Earnings ESP of -0.25% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Below are three defense stocks that have the right combination of elements to post an earnings beat this time around.
Boeing delivered a four-quarter average negative earnings surprise of 903.50%. The consensus estimate for fourth-quarter loss is pegged at 72 cents per share, while that for sales is pinned at $21.23 billion.
L3Harris Technologies (LHX - Free Report) is scheduled to release fourth-quarter results on Jan 25. LHX has an Earnings ESP of +0.09% and a Zacks Rank #3 at present.
L3Harris delivered a four-quarter average earnings surprise of 1.70%. The Zacks Consensus Estimate for LHX’s fourth-quarter earnings is pegged at $3.31 per share, while that for sales is pinned at $5.29 billion.
RTX Corporation (RTX - Free Report) is expected to report fourth-quarter results on Jan 23. RTX has an Earnings ESP of +0.02% and a Zacks Rank #3 at present.
RTX delivered a four-quarter average earnings surprise of 6.91%. The consensus mark for RTX’s fourth-quarter earnings is pegged at $1.25 per share, while that for sales is pinned at $19.83 billion.
Image: Shutterstock
Will Poor Segmental Performance Hit Lockheed's (LMT) Q4 Earnings?
Lockheed Martin Corporation (LMT - Free Report) is slated to release fourth-quarter and full-year 2023 results on Jan 23, before the opening bell.
The company delivered an average earnings surprise of 4.35% in the last four quarters. Lower sales volume from its major segments, along with lower equity earnings from ULA, is likely to have hurt LMT’s fourth-quarter performance.
Let's see how things might have shaped up prior to the announcement.
Aeronautics to Post Dismal Sales
The Aeronautics segment, which primarily manufactures advanced, combat-proven jets, and contributes almost 40% to the company’s top line, is likely to deliver unimpressive results in the to-be-reported quarter.
Lockheed Martin Corporation Price and EPS Surprise
Lockheed Martin Corporation price-eps-surprise | Lockheed Martin Corporation Quote
Higher production volumes for the F-16 and classified programs are expected to have benefited this segment’s performance. However, unfavorable F-35 deliveries are expected due to software maturation with the Tech Refresh 3 program and hardware delivery timing, which is consistent with Lockheed’s latest delivery expectation that is lower than its earlier projection. Such lower F-35 deliveries might have impacted this business unit’s overall sales.
The Zacks Consensus Estimate for the Aeronautics unit’s fourth-quarter revenues is pegged at $7,084.2 million, indicating a 7.2% decline from the prior-year period’s reported figure.
Disappointing Projections From Other Segments
The remaining three segments are also projected to have performed unfavorably in the fourth quarter.
Higher development volume from the next-generation interceptor, as well as Fleet Ballistic Missile and Orion programs, is expected to have benefited the Space business segment’s fourth-quarter performance. However, lower launch volume from the United Launch Alliance (ULA) program might have impacted this unit’s sales results.
The Zacks Consensus Estimate for the segment’s revenues is pinned at $3,163.9 million, indicating a 3.1% decline from the prior-year quarter’s reported number.
Lockheed’s Missiles and Fire Control (MFC) segment provides critical missile defense support to the United States and foreign allies. Within this unit, lower volume from integrated air and missile defense might have hurt sales performance.
The Zacks Consensus Estimate for MFC’s fourth-quarter revenues is currently pegged at $3,202.8 million, indicating a 2.6% decline from the year-ago quarter’s reported figure.
Lower sales volume from Sikorsky helicopter programs might have outweighed higher sales volume from integrated warfare systems and sensors programs, thereby impacting the Rotary and Mission Systems (RMS) segment’s sales in the to-be-reported quarter.
The Zacks Consensus Estimate for the RMS segment’s fourth-quarter revenues is currently pegged at $4,487.1 million, indicating a 6.6% improvement from that registered in the prior-year quarter.
Impressive Delivery Projections
For manufacturing companies like Lockheed, successful delivery of its manufactured goods indicates solid revenue generation. To this end, we notice that our forecast estimates LMT to have delivered 93 jets in the fourth quarter, which indicates year-over-year growth of 6.4%.
Q4 Expectations
The anticipated sales decline in each of LMT’s major segments is likely to have impacted its revenues in the fourth quarter. However, solid delivery expectations might have had some favorable impact on its overall sales performance.
The Zacks Consensus Estimate for the company’s fourth-quarter revenues is pegged at $17.98 billion, indicating a 5.3% decrease from the year-ago quarter’s reported number.
Such a dismal top-line performance, lower equity earnings from ULA, lower segment profit and higher net interest expense are expected to have contributed unfavorably to LMT’s earnings.
The Zacks Consensus Estimate for the defense giant’s fourth-quarter earnings is pinned at $7.26 per share, which implies a deterioration of 6.8% from the prior-year quarter’s reported figure.
What the Zacks Model Unveils
Our proven model does not conclusively predict 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. This is not the case here as you will see below.
LMT has an Earnings ESP of -0.25% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Below are three defense stocks that have the right combination of elements to post an earnings beat this time around.
The Boeing Company (BA - Free Report) is expected to release fourth-quarter results on Jan 31. BA has an Earnings ESP of +12.32% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Boeing delivered a four-quarter average negative earnings surprise of 903.50%. The consensus estimate for fourth-quarter loss is pegged at 72 cents per share, while that for sales is pinned at $21.23 billion.
L3Harris Technologies (LHX - Free Report) is scheduled to release fourth-quarter results on Jan 25. LHX has an Earnings ESP of +0.09% and a Zacks Rank #3 at present.
L3Harris delivered a four-quarter average earnings surprise of 1.70%. The Zacks Consensus Estimate for LHX’s fourth-quarter earnings is pegged at $3.31 per share, while that for sales is pinned at $5.29 billion.
RTX Corporation (RTX - Free Report) is expected to report fourth-quarter results on Jan 23. RTX has an Earnings ESP of +0.02% and a Zacks Rank #3 at present.
RTX delivered a four-quarter average earnings surprise of 6.91%. The consensus mark for RTX’s fourth-quarter earnings is pegged at $1.25 per share, while that for sales is pinned at $19.83 billion.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.