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Will Lockheed Martin (LMT) Disappoint in Q3 Earnings?
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Pentagon’s largest defense contractor, Lockheed Martin Corporation (LMT - Free Report) will release third-quarter 2016 results on Oct 25, before the opening bell.
In the prior quarter, the company reported a positive earnings surprise of 13.70%. It is worth noting that Lockheed Martin has outperformed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 5.45%.
Let’s see how things are shaping up at the company prior to this announcement.
Lockheed Martin continues to enjoy its leading position in the U.S. aerospace and defense sector, courtesy of its varied product offerings. Also, multiple contract wins by the company from the Pentagon as well as foreign allies raise optimism.
The important contracts received during the third quarter include the colossal $10 billion win from the U.S. Air Force in Aug 2016. Per the terms of the deal, the company will cover all future delivery orders of C-130J Super Hercules model under its Hercules family of military transport aircraft.
In the next month, the U.S. signed a landmark agreement with Israel under which the later will receive military aid worth $38 billion over a period of 10 years. Apart from The Boeing Company (BA), Lockheed will gain the maximum from this deal. Meanwhile, Israel will receive 33 F-35 jets and several C-130 heavy-lift cargo planes.
Also, recently, the company’s Aeronautics business division won a modification contract worth $743.2 million from the U.S. Navy for the F-35 Lightening II Joint Strike Fighter aircraft.
Among the notable targets for the third quarter is the completion of divesture of the company’s Information Systems & Global Solutions business segment. Consequent to the divestment, Lockheed Martin will receive a special cash payment of $1.8 billion.
The company also expects to increase its ownership and obtain control of a joint venture within the Space Systems business division this quarter; to manage the atomic weapons establishment in the U.K.
For the third quarter, the Zacks Consensus Estimate for earnings stand at $2.86 a share, down 2.1% year over year, while the consensus for revenues is pegged at $11.44 billion, implying a 0.22% year-over-year decline.
Earnings Whispers
Our proven model does not conclusively show that Lockheed Martin is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Lockheed Martin has an earnings ESP of +0.35%.That is because the Most Accurate estimate is pegged at $2.87, while the Zacks Consensus Estimate is pegged lower at $2.86.
Zacks Rank: Lockheed Martin has a Zacks Rank #4 (Sell) which complicates surprise prediction, despite the company’s positive ESP.
Also, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few stocks in the Aerospace and Defense space worth considering on the basis of our model which shows that they have the right combination to pull off a beat:
L-3 Communications Holdings Inc. has an earnings ESP of +2.75% and a Zacks Rank #3 (Hold). The company is scheduled to report quarterly results on Oct 27.
Raytheon Company has an earnings ESP of +1.84% and a Zacks Rank #3. The company is likely to release results on Oct 27.
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Will Lockheed Martin (LMT) Disappoint in Q3 Earnings?
Pentagon’s largest defense contractor, Lockheed Martin Corporation (LMT - Free Report) will release third-quarter 2016 results on Oct 25, before the opening bell.
In the prior quarter, the company reported a positive earnings surprise of 13.70%. It is worth noting that Lockheed Martin has outperformed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 5.45%.
Let’s see how things are shaping up at the company prior to this announcement.
LOCKHEED MARTIN Price and EPS Surprise
LOCKHEED MARTIN Price and EPS Surprise | LOCKHEED MARTIN Quote
Factors at Play
Lockheed Martin continues to enjoy its leading position in the U.S. aerospace and defense sector, courtesy of its varied product offerings. Also, multiple contract wins by the company from the Pentagon as well as foreign allies raise optimism.
The important contracts received during the third quarter include the colossal $10 billion win from the U.S. Air Force in Aug 2016. Per the terms of the deal, the company will cover all future delivery orders of C-130J Super Hercules model under its Hercules family of military transport aircraft.
In the next month, the U.S. signed a landmark agreement with Israel under which the later will receive military aid worth $38 billion over a period of 10 years. Apart from The Boeing Company (BA), Lockheed will gain the maximum from this deal. Meanwhile, Israel will receive 33 F-35 jets and several C-130 heavy-lift cargo planes.
Also, recently, the company’s Aeronautics business division won a modification contract worth $743.2 million from the U.S. Navy for the F-35 Lightening II Joint Strike Fighter aircraft.
Among the notable targets for the third quarter is the completion of divesture of the company’s Information Systems & Global Solutions business segment. Consequent to the divestment, Lockheed Martin will receive a special cash payment of $1.8 billion.
The company also expects to increase its ownership and obtain control of a joint venture within the Space Systems business division this quarter; to manage the atomic weapons establishment in the U.K.
For the third quarter, the Zacks Consensus Estimate for earnings stand at $2.86 a share, down 2.1% year over year, while the consensus for revenues is pegged at $11.44 billion, implying a 0.22% year-over-year decline.
Earnings Whispers
Our proven model does not conclusively show that Lockheed Martin is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Lockheed Martin has an earnings ESP of +0.35%.That is because the Most Accurate estimate is pegged at $2.87, while the Zacks Consensus Estimate is pegged lower at $2.86.
Zacks Rank: Lockheed Martin has a Zacks Rank #4 (Sell) which complicates surprise prediction, despite the company’s positive ESP.
Also, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few stocks in the Aerospace and Defense space worth considering on the basis of our model which shows that they have the right combination to pull off a beat:
L-3 Communications Holdings Inc. has an earnings ESP of +2.75% and a Zacks Rank #3 (Hold). The company is scheduled to report quarterly results on Oct 27.
General Dynamics Corporation (GD - Free Report) , slated to report on Oct 26, has an earnings ESP of +0.84% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Raytheon Company has an earnings ESP of +1.84% and a Zacks Rank #3. The company is likely to release results on Oct 27.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>