Lockheed Martin Corporation LMT is scheduled to release fourth-quarter and full-year 2024 results on Jan. 28, before the opening bell.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The Zacks Consensus Estimate for revenues is pegged at $18.85 billion, implying a 0.1% decline from the year-ago quarter's reported figure. The consensus mark for fourth-quarter earnings is pegged at $6.52 per share, suggesting a 17.5% decline from $7.90 reported in the prior-year quarter. The bottom-line estimate has gone down 1.2% in the past 60 days.
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LMT, America’s largest defense contractor, has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 8.48%.
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Earnings Whisper for LMT
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 chances of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Lockheed has a Zacks Rank #3 and an Earnings ESP of +1.98%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping LMT’s Upcoming Q4 Results
A mixed sales performance from LMT’s four business segments is likely to have had a moderate impact on the company’s top-line performance.
Aeronautics to Post Solid 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 impressive fourth-quarter results.
Higher sales volume from the F-16 and F-35 jet programs is likely to have bolstered this segment’s top line.
The Zacks Consensus Estimate for the Aeronautics unit’s fourth-quarter revenues is pegged at $7,877.6 million, indicating a 3.5% rise from the prior-year period’s reported figure.
Mixed Projections From Other Segments
The remaining three segments are projected to have delivered mixed performance in the to-be-reported quarter.
Lower sales from the commercial civil space due to lower volume from the Orion program might have adversely impacted the Space segment’s top line. The Zacks Consensus Estimate for the segment’s revenues is pinned at $3,242.7 million, indicating a 4% decline from the prior-year quarter’s reported number.
LMT’s Missiles and Fire Control (“MFC”) segment provides critical missile defense support to the United States and foreign allies. A higher sales volume, resulting from the production ramp-up of the Guided Multiple Launch Rocket Systems and Long Range Anti-Ship Missile programs, is likely to have benefited this unit’s quarterly sales performance.
The Zacks Consensus Estimate for MFC’s fourth-quarter revenues is currently pegged at $3,115.2 million, indicating 4.5% growth from the top line recorded a year ago.
Higher sales from the Sikorsky unit, particularly driven by the higher production volume of the CH-53K, Seahawk and Blackhawk helicopter programs, are likely to have bolstered the Rotary and Mission Systems segment’s sales in the quarter under review.
Outlook for LMT’s Q4 Bottom Line
Unimpressive sales performance from one of LMT's major business segments might have weighed down on its overall earnings performance in the fourth quarter.
LMT had been recognizing reach-forward loss associated with a classified missile program at its MFC unit since the first quarter of 2024. With a potential loss of $1.3 billion associated with this program, LMT might have incurred a notable loss in its MFC unit in the fourth quarter. This, in turn, is likely to have adversely impacted its operating margin performance and, thereby, bottom-line growth.
Also, the unfavorable cost pressure faced by its Sikorsky business might have had affected LMT’s overall earnings performance in the quarter under review.
Price Performance & Valuation
Lockheed’s shares have exhibited an upward trend, gaining a notable percentage over the past year. Specifically, the stock has risen 10.5%, outperforming the Zacks aerospace-defense industry’s decline of 2.4%.
LMT- One Year Performance
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As evident from the image, other notable stocks from the same industry have also rallied year to date and comfortably outpaced the industry’s performance. Shares of Leidos Holdings LDOS, General Dynamics GD and Northrop Grumman NOC have rallied 44.3%, 8.7% and 8.1%, respectively.
From a valuation perspective, LMT is trading at a premium when compared to its peer group. Currently, it is trading at 18.09X forward 12-month earnings, which is higher than its peer group’s forward earnings multiple of 15.92. Also, its five-year median is 15.95X. So, the company’s valuation also looks stretched compared with its own range.
LMT’s Price-to-Earnings (forward 12 Months)
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Investment Thesis
Widespread hostilities engulfing the global defense map in recent times have prompted nations worldwide to ramp up their defense arsenal significantly. This has been acting as a solid growth catalyst for defense contractors like Lockheed in the form of solid contract wins. We may thus expect LMT’s fourth-quarter results to reflect this in terms of notable backlog growth.
Backed by its solid top-line prospects, the company has been offering notable rewards to its shareholders. Impressively, LMT’s dividend yield of 2.69% outpaces that of the S&P 500 (1.20%).
However, LMT’s elevated leverage remains a cause of concern for its investors, as evident from its long-term debt-to-capital ratio, which came in quite higher than that of its peer group.
LMT’s Long-Term Debt-to-Capital
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Should You Buy LMT Stock Before Q3 Earnings Release?
Lockheed is less likely to disappoint with its third-quarter results, considering the company’s solid share price performance over the past year, favorable Zacks Rank and positive Earnings ESP. However, considering its premium valuation and elevated leverage, investors interested in this stock should wait until next Tuesday.
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