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Lockheed (LMT) Up 5.6% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Lockheed Martin (LMT - Free Report) . Shares have added about 5.6% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Lockheed Q4 Earnings Top Estimates, Sales Rise Y/Y
Lockheed Martin reported fourth-quarter 2022 adjusted earnings of $7.79 per share, which surpassed the Zacks Consensus Estimate of $7.41 by 5.1%. The bottom line also improved 7.9% year over year.
The company reported GAAP earnings of $7.40 in the fourth quarter of 2022 compared with $7.47 in the prior-year quarter.
For the full-year 2022, the company reported adjusted earnings of $27.23 per share, which beat the Zacks Consensus Estimate of $21.70 by 25.5%. GAAP earnings for the full-year 2022 came in at $21.66 compared with $22.76 in 2021.
Our model projected adjusted earnings of $7.25 per share for the fourth quarter and $26.88 per share for 2022.
Operational Highlights
In the reported quarter, net sales amounted to $19 billion, which surpassed the Zacks Consensus Estimate of $18.25 billion by 4.1%. The top line rose 7.3% from the $17.7 billion reported in the year-ago quarter.
For the full-year 2022, net sales came in at $66 billion, surpassing the Zacks Consensus Estimate of $65.24 billion by 1.2%. However, net sales declined 1.5% year over year.
Our model projected net sales of $18.26 billion for the fourth quarter and $65.25 billion for 2022.
Backlog
Lockheed Martin ended 2022 (on Dec 31, 2022) with $149.99 billion in the backlog compared with $135.36 billion at the end of 2021. Of this, the Aeronautics segment accounted for $56.63 billion, while Rotary and Mission Systems contributed $34.95 billion.
Meanwhile, Space Systems and the Missiles and Fire Control segments contributed $29.68 billion and $28.74 billion, respectively.
Segmental Performance
Aeronautics:Sales improved 7% year over year to $7.64 billion, primarily driven by higher sales from the F-35 program, the C-130 program and classified contracts. The segment’s operating profit decreased 0.5% year over year to $816 million. The operating margin contracted 80 basis points (bps) to 10.7%.
Missiles and Fire Control:Quarterly sales rose 2% year over year to $3.29 billion due to higher sales from tactical and strike missile programs. The segment’s operating profit increased 2.9% year over year to $451 million, while the operating margin expanded 10 bps to 13.7%.
Space Systems:Sales increased 12% year over year to $3.27 billion in the fourth quarter due to higher sales from strategic and missile defense programs, national security space programs and commercial civil space programs. The segment’s operating profit decreased 25% to $231 million. The operating margin contracted 340 bps to 7.1% in the quarter under review.
Rotary and Mission Systems:Quarterly revenues increased 8% on a year-over-year basis to $4.80 billion. The increase was primarily due to higher sales for integrated warfare systems and sensors programs, Sikorsky helicopter programs and the Combat Rescue Helicopter program.
The segment’s operating profit rose 13.4% to $508 million in the fourth quarter. The operating margin expanded 60 bps to 10.6% in the reported quarter.
Financial Condition
Lockheed Martin’s cash and cash equivalents totaled $2.55 billion at the end of 2022 compared with $3.60 billion at the end of 2021. Cash from operating activities at the end of 2022 amounted to $7.80 billion compared with $9.22 billion a year ago.
Guidance
Lockheed Martin initiated its financial guidance for 2023. The company expects 2023 revenues in the range of $65-66 billion. The Zacks Consensus Estimate for full-year revenues, which is pegged at $65.72 billion, is in line with the midpoint of the company’s guided range.
Earnings per share are anticipated in the band of $26.60-$26.90 for 2023. The Zacks Consensus Estimate for the company’s full-year earnings of $27.38 per share is higher than the midpoint of LMT’s guidance range. Also, the company expects its free cash flow guidance to be approximately $6.2 billion for 2023.
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 strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 this revision 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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Lockheed (LMT) Up 5.6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Lockheed Martin (LMT - Free Report) . Shares have added about 5.6% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Lockheed Q4 Earnings Top Estimates, Sales Rise Y/Y
Lockheed Martin reported fourth-quarter 2022 adjusted earnings of $7.79 per share, which surpassed the Zacks Consensus Estimate of $7.41 by 5.1%. The bottom line also improved 7.9% year over year.
The company reported GAAP earnings of $7.40 in the fourth quarter of 2022 compared with $7.47 in the prior-year quarter.
For the full-year 2022, the company reported adjusted earnings of $27.23 per share, which beat the Zacks Consensus Estimate of $21.70 by 25.5%. GAAP earnings for the full-year 2022 came in at $21.66 compared with $22.76 in 2021.
Our model projected adjusted earnings of $7.25 per share for the fourth quarter and $26.88 per share for 2022.
Operational Highlights
In the reported quarter, net sales amounted to $19 billion, which surpassed the Zacks Consensus Estimate of $18.25 billion by 4.1%. The top line rose 7.3% from the $17.7 billion reported in the year-ago quarter.
For the full-year 2022, net sales came in at $66 billion, surpassing the Zacks Consensus Estimate of $65.24 billion by 1.2%. However, net sales declined 1.5% year over year.
Our model projected net sales of $18.26 billion for the fourth quarter and $65.25 billion for 2022.
Backlog
Lockheed Martin ended 2022 (on Dec 31, 2022) with $149.99 billion in the backlog compared with $135.36 billion at the end of 2021. Of this, the Aeronautics segment accounted for $56.63 billion, while Rotary and Mission Systems contributed $34.95 billion.
Meanwhile, Space Systems and the Missiles and Fire Control segments contributed $29.68 billion and $28.74 billion, respectively.
Segmental Performance
Aeronautics:Sales improved 7% year over year to $7.64 billion, primarily driven by higher sales from the F-35 program, the C-130 program and classified contracts. The segment’s operating profit decreased 0.5% year over year to $816 million. The operating margin contracted 80 basis points (bps) to 10.7%.
Missiles and Fire Control:Quarterly sales rose 2% year over year to $3.29 billion due to higher sales from tactical and strike missile programs. The segment’s operating profit increased 2.9% year over year to $451 million, while the operating margin expanded 10 bps to 13.7%.
Space Systems:Sales increased 12% year over year to $3.27 billion in the fourth quarter due to higher sales from strategic and missile defense programs, national security space programs and commercial civil space programs. The segment’s operating profit decreased 25% to $231 million. The operating margin contracted 340 bps to 7.1% in the quarter under review.
Rotary and Mission Systems:Quarterly revenues increased 8% on a year-over-year basis to $4.80 billion. The increase was primarily due to higher sales for integrated warfare systems and sensors programs, Sikorsky helicopter programs and the Combat Rescue Helicopter program.
The segment’s operating profit rose 13.4% to $508 million in the fourth quarter. The operating margin expanded 60 bps to 10.6% in the reported quarter.
Financial Condition
Lockheed Martin’s cash and cash equivalents totaled $2.55 billion at the end of 2022 compared with $3.60 billion at the end of 2021. Cash from operating activities at the end of 2022 amounted to $7.80 billion compared with $9.22 billion a year ago.
Guidance
Lockheed Martin initiated its financial guidance for 2023. The company expects 2023 revenues in the range of $65-66 billion. The Zacks Consensus Estimate for full-year revenues, which is pegged at $65.72 billion, is in line with the midpoint of the company’s guided range.
Earnings per share are anticipated in the band of $26.60-$26.90 for 2023. The Zacks Consensus Estimate for the company’s full-year earnings of $27.38 per share is higher than the midpoint of LMT’s guidance range. Also, the company expects its free cash flow guidance to be approximately $6.2 billion for 2023.
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 strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 this revision 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.