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Why Is Lockheed (LMT) Down 4.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for Lockheed Martin (LMT - Free Report) . Shares have lost about 4.3% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lockheed due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Lockheed Martin Q1 Earnings Top Estimates, Sales Down Y/Y
Lockheed Martin reported first-quarter 2022 earnings of $6.44 per share, which surpassed the Zacks Consensus Estimate of $6.22 by 3.5%. The bottom line however declined 1.8% year over year.
Operational Highlights
In the reported quarter, net sales amounted to $14.96 billion, which missed the Zacks Consensus Estimate of $15.53 billion by 3.7%. The top line also declined 8% from $16.26 billion reported in the year-ago quarter.
Backlog
Lockheed Martin ended the first quarter of 2022 (on Mar 27, 2022) with $134.23 billion in backlog compared with $135.36 billion at the end of fourth-quarter 2021. Of this, the Aeronautics segment accounted for $46.12 billion, while Rotary and Mission Systems contributed $34.26 billion. Meanwhile, Space Systems and the Missiles and Fire Control segments contributed $27.60 billion and $26.26 billion, respectively.
Segmental Performance
Aeronautics: Sales inched up 0.2% year over year to $6.40 billion, primarily due to higher net sales from the F-16 program.
The segment’s operating profit declined 2% year over year to $679 million. The operating margin contracted 30 basis points (bps) to 10.6%.
Missiles and Fire Control: Quarterly sales declined 10.8% year over year to $2.45 billion due to lower sales at integrated air and missile defense programs, tactical and strike missile programs, sensors and global sustainment programs as well as Sniper Advanced Targeting Pod.
The segment’s operating profit declined 3% year over year to $384 million, while the operating margin expanded 130 bps to 15.7%.
Space Systems: Sales decreased 15.1% year over year to $2.56 billion in the first quarter. The decrease was primarily due to lower net sales at the Atomic Weapons Establishment program as it was no longer included in the company's financial results beginning in the fourth quarter of 2021. Also, lower net sales from commercial civil space programs contributed to lower sales of the segment.
The segment’s operating profit improved 7.9% to $245 million. The operating margin expanded 210 bps to 9.6% in the quarter under review.
Rotary and Mission Systems: Quarterly revenues declined 13.5% on a year-over-year basis to $3.55 billion. The decrease was primarily due to lower sales for training and logistics solutions (TLS) programs, integrated warfare systems and sensors (IWSS) programs, various C6ISR programs and Sikorsky helicopter programs.
The segment’s operating profit dropped 19.6% to $348 million in the first quarter. The operating margin contracted 70 bps to 9.8% in the reported quarter.
Financial Condition
Lockheed Martin’s cash and cash equivalents totaled $1.88 billion at the end of first-quarter 2022 compared with $3.60 billion at the end of 2021.
Cash from operations at the end of first-quarter 2022 amounted to $1.41 billion compared with $1.75 billion a year ago.
Guidance
Lockheed Martin reiterated its financial guidance for 2022.
The company reiterated its revenue guidance of approximately $66 billion for 2022. The Zacks Consensus Estimate for full-year revenues, which is pegged at $66.35 billion, is slightly more than the company’s guidance.
Earnings per share are still anticipated at $26.70 for 2022. The Zacks Consensus Estimate for the company’s full-year earnings, which stands at $26.75 per share, lies above LMT’s guidance.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Lockheed has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Lockheed has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Lockheed (LMT) Down 4.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Lockheed Martin (LMT - Free Report) . Shares have lost about 4.3% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lockheed due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Lockheed Martin Q1 Earnings Top Estimates, Sales Down Y/Y
Lockheed Martin reported first-quarter 2022 earnings of $6.44 per share, which surpassed the Zacks Consensus Estimate of $6.22 by 3.5%. The bottom line however declined 1.8% year over year.
Operational Highlights
In the reported quarter, net sales amounted to $14.96 billion, which missed the Zacks Consensus Estimate of $15.53 billion by 3.7%. The top line also declined 8% from $16.26 billion reported in the year-ago quarter.
Backlog
Lockheed Martin ended the first quarter of 2022 (on Mar 27, 2022) with $134.23 billion in backlog compared with $135.36 billion at the end of fourth-quarter 2021. Of this, the Aeronautics segment accounted for $46.12 billion, while Rotary and Mission Systems contributed $34.26 billion. Meanwhile, Space Systems and the Missiles and Fire Control segments contributed $27.60 billion and $26.26 billion, respectively.
Segmental Performance
Aeronautics: Sales inched up 0.2% year over year to $6.40 billion, primarily due to higher net sales from the F-16 program.
The segment’s operating profit declined 2% year over year to $679 million. The operating margin contracted 30 basis points (bps) to 10.6%.
Missiles and Fire Control: Quarterly sales declined 10.8% year over year to $2.45 billion due to lower sales at integrated air and missile defense programs, tactical and strike missile programs, sensors and global sustainment programs as well as Sniper Advanced Targeting Pod.
The segment’s operating profit declined 3% year over year to $384 million, while the operating margin expanded 130 bps to 15.7%.
Space Systems: Sales decreased 15.1% year over year to $2.56 billion in the first quarter. The decrease was primarily due to lower net sales at the Atomic Weapons Establishment program as it was no longer included in the company's financial results beginning in the fourth quarter of 2021. Also, lower net sales from commercial civil space programs contributed to lower sales of the segment.
The segment’s operating profit improved 7.9% to $245 million. The operating margin expanded 210 bps to 9.6% in the quarter under review.
Rotary and Mission Systems: Quarterly revenues declined 13.5% on a year-over-year basis to $3.55 billion. The decrease was primarily due to lower sales for training and logistics solutions (TLS) programs, integrated warfare systems and sensors (IWSS) programs, various C6ISR programs and Sikorsky helicopter programs.
The segment’s operating profit dropped 19.6% to $348 million in the first quarter. The operating margin contracted 70 bps to 9.8% in the reported quarter.
Financial Condition
Lockheed Martin’s cash and cash equivalents totaled $1.88 billion at the end of first-quarter 2022 compared with $3.60 billion at the end of 2021.
Cash from operations at the end of first-quarter 2022 amounted to $1.41 billion compared with $1.75 billion a year ago.
Guidance
Lockheed Martin reiterated its financial guidance for 2022.
The company reiterated its revenue guidance of approximately $66 billion for 2022. The Zacks Consensus Estimate for full-year revenues, which is pegged at $66.35 billion, is slightly more than the company’s guidance.
Earnings per share are still anticipated at $26.70 for 2022. The Zacks Consensus Estimate for the company’s full-year earnings, which stands at $26.75 per share, lies above LMT’s guidance.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Lockheed has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Lockheed has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.