A month has gone by since the last earnings report for Lockheed Martin (LMT Quick QuoteLMT - Free Report) . Shares have added about 7.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Lockheed due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Lockheed Beats on Q2 Earnings, Ups '24 Sales View

Lockheed Martin Corporation reported second-quarter 2024 adjusted earnings of $7.11 per share, which beat the Zacks Consensus Estimate of $6.45 by 10.2%. The bottom line also improved 5.6% from the year-ago quarter's recorded figure of $6.73.

The company reported GAAP earnings of $6.85 per share compared with $6.63 in the prior-year period.

The year-over-year bottom-line improvement can be attributed to solid sales growth and operating profit improvement from the second quarter of 2023.

Operational Highlights

Net sales were $18.12 billion, which surpassed the Zacks Consensus Estimate of $17.10 billion by 6%. The top line also increased 8.6% from $16.69 billion reported in the year-ago quarter.

The year-over-year top-line improvement can be attributed to sales growth from each of the four company segments.

Backlog

LMT’s backlog as of Jun 30, 2024, was $158.34 billion compared with $159.37 billion at the end of first-quarter 2024.

Our model projected a backlog worth $179.34 billion for the second quarter.

The Aeronautics segment accounted for $53.03 billion of the total backlog amount, while Rotary and Mission Systems contributed $37.36 billion. The Missiles and Fire Control segment contributed $34.83 billion, while the Space unit accounted for $33.11 billion.

Segmental Performance

Aeronautics: Sales improved 5.8% year over year to $7.28 billion. This was driven by sales growth from a higher volume on sustainment, development and production contracts for F-35 program, and ramped-up production of the F-16 program.

The segment’s operating profit improved 4.6% year over year to $751 million. The operating margin, however, contracted 10 basis points (bps) to 10.3%.

Missiles and Fire Control: Quarterly sales improved a solid 12.6% year over year to $3.10 billion. This was on account of higher sales from tactical and strike missile programs, driven by a production ramp-up of Guided Multiple Launch Rocket Systems (“GMLRS”) and Long Range Anti-Ship Missile (“LRASM”) programs.

The segment’s operating profit increased 21.3% year over year to $450 million. The operating margin of 14.5% expanded 100 bps from the year-ago quarter’s level.

Space: Sales rose 0.9% year over year to $3.20 billion due to higher sales from strategic and missile defense programs, driven by higher volume of the hypersonics and Fleet Ballistic Missile (“FBM”) programs.

The segment’s operating profit rose 10.9% to $346 million. The operating margin expanded 90 bps to 10.8%.

Rotary and Mission Systems: Quarterly revenues improved 16.7% to $4.55 billion on a year-over-year basis. This was primarily driven by higher net sales from integrated warfare systems and sensors programs. Higher net sales from Sikorsky helicopter programs also aided this segment’s top line.

The segment’s operating profit rose 9% to $495 million in the reported quarter. The operating margin, however, deteriorated 70 bps to 10.9% in the said time frame.

Financial Condition

Lockheed’s cash and cash equivalents totaled $2.52 billion at the end of second-quarter 2024 compared with $1.44 billion at the end of 2023.

Cash from operating activities amounted to $3.51 billion as of Jun 31, 2024, compared with $2.66 billion in the year-ago period.

Long-term debt as of Jun 30, 2024, totaled $19.12 billion, up from $17.29 billion as of Dec 31, 2023.

2024 Guidance

Lockheed has partially raised its financial guidance for 2024. The company now expects to generate revenues in the range of $70.50-$71.50 billion, up from the prior guidance of $68.50-$70.00 billion. The Zacks Consensus Estimate for revenues is pegged at $69.80 billion, which lies below the company’s updated guided range.

LMT currently expects 2024 earnings per share (EPS) to be in the range of $26.10-$26.60, up from the earlier guidance of $25.65-$26.35. The Zacks Consensus Estimate for the company’s full-year EPS is pinned at $26.20, lower than the mid-point of the company’s updated guidance.

Lockheed still expects to generate free cash flow in the range of $6.00-$6.30 billion and incur capital expenditures of $1.75 billion during 2024.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

Currently, Lockheed has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Lockheed has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.