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Lockheed (LMT) Down 1.4% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Lockheed Martin (LMT - Free Report) . Shares have lost about 1.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Lockheed Beats on Q2 Earnings, Ups ’23 Sales View
Lockheed Martin reported second-quarter 2023 adjusted earnings of $6.73 per share, which surpassed the Zacks Consensus Estimate of $6.43 by 4.7%. The bottom line also improved 6.5% from the year-ago quarter's figure.
The company reported GAAP earnings of $6.63 per share compared with $1.16 in the prior-year period.
Operational Highlights
Net sales amounted to $16.69 billion in the reported quarter, which surpassed the Zacks Consensus Estimate of $15.86 billion by 5.3%. The top line rose 8.1% from $15.45 billion in the year-ago quarter.
Backlog
Lockheed’s backlog as of Jun 25, 2023, was $158.01 billion compared with $145.09 billion at the end of first-quarter 2023.
Our model projected backlog worth $145.84 billion in the second quarter of 2023.
The Aeronautics segment accounted for $58.10 billion of this amount, while Rotary and Mission Systems contributed $35.95 billion. The Missiles and Fire Control, and the Space Systems segments contributed $34.02 billion and $29.95 billion, respectively.
Segmental Performance
Aeronautics: Sales improved 17.3% year over year to $6.88 billion, primarily driven by higher volume of production contracts for F-35 jets as well as higher volume of sustainment contracts for C-130 program. Higher net sales from classified programs also added to this unit’s quarterly sales growth.
The segment’s operating profit rose 17% year over year to $718 million. The operating margin, however, contracted 10 basis points (bps) to 10.4%.
Missiles and Fire Control: Quarterly sales inched up 0.4% year over year to $2.76 billion. This was driven by higher net sales from tactical and strike missile programs amid lower sales from integrated air and missile defense programs.
The segment’s operating profit decreased 11% year over year to $371 million, while the operating margin contracted 170 bps to 13.5%.
Space Systems: Sales increased 12.1% year over year to $3.17 billion due to higher sales from strategic and missile defense programs, national security space programs and commercial civil space programs.
The segment’s operating profit improved 15% to $312 million. The operating margin expanded 30 bps to 9.9% in the quarter under review.
Rotary and Mission Systems: Quarterly revenues decreased 3% to $3.90 billion on a year-over-year basis. This was primarily due to lower sales from Sikorsky helicopter program on account of lower production volume for Black Hawk helicopters.
The segment’s operating profit declined 2% to $454 million in the reported quarter. The operating margin expanded 10 bps to 11.6% in the same time frame.
Financial Condition
Lockheed’s cash and cash equivalents totaled $3.67 billion at the end of second-quarter 2023 compared with $2.55 billion at the end of 2022.
Cash from operating activities amounted to $2.66 billion during the first six months of 2023 compared with $2.77 billion in the year-ago period.
Long-term debt as of Jun 30, 2023, totaled $17.26 billion, up from $15.43 billion as of Dec 31, 2022.
2023 Guidance
Lockheed has partly raised its financial guidance for 2023. The company now expects revenues of $66.25-$66.75 billion compared with its earlier projection of $65-66 billion. The Zacks Consensus Estimate for full-year revenues is pegged at $65.77 billion, which lies lower than the company’s guided range.
LMT now expects earnings per share (EPS) in the range of $27.00-$27.20, up from the prior guidance of $26.60-$26.90. The Zacks Consensus Estimate for the company’s full-year EPS is pinned at $27.06, lower than the mid-point of the company’s guided range.
Lockheed, however, still expects to generate free cash flow of $6.2 billion during 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Lockheed has a subpar Growth Score of D, a grade with the same score on the momentum front. However, 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 C. 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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Lockheed (LMT) Down 1.4% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Lockheed Martin (LMT - Free Report) . Shares have lost about 1.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Lockheed Beats on Q2 Earnings, Ups ’23 Sales View
Lockheed Martin reported second-quarter 2023 adjusted earnings of $6.73 per share, which surpassed the Zacks Consensus Estimate of $6.43 by 4.7%. The bottom line also improved 6.5% from the year-ago quarter's figure.
The company reported GAAP earnings of $6.63 per share compared with $1.16 in the prior-year period.
Operational Highlights
Net sales amounted to $16.69 billion in the reported quarter, which surpassed the Zacks Consensus Estimate of $15.86 billion by 5.3%. The top line rose 8.1% from $15.45 billion in the year-ago quarter.
Backlog
Lockheed’s backlog as of Jun 25, 2023, was $158.01 billion compared with $145.09 billion at the end of first-quarter 2023.
Our model projected backlog worth $145.84 billion in the second quarter of 2023.
The Aeronautics segment accounted for $58.10 billion of this amount, while Rotary and Mission Systems contributed $35.95 billion. The Missiles and Fire Control, and the Space Systems segments contributed $34.02 billion and $29.95 billion, respectively.
Segmental Performance
Aeronautics: Sales improved 17.3% year over year to $6.88 billion, primarily driven by higher volume of production contracts for F-35 jets as well as higher volume of sustainment contracts for C-130 program. Higher net sales from classified programs also added to this unit’s quarterly sales growth.
The segment’s operating profit rose 17% year over year to $718 million. The operating margin, however, contracted 10 basis points (bps) to 10.4%.
Missiles and Fire Control: Quarterly sales inched up 0.4% year over year to $2.76 billion. This was driven by higher net sales from tactical and strike missile programs amid lower sales from integrated air and missile defense programs.
The segment’s operating profit decreased 11% year over year to $371 million, while the operating margin contracted 170 bps to 13.5%.
Space Systems: Sales increased 12.1% year over year to $3.17 billion due to higher sales from strategic and missile defense programs, national security space programs and commercial civil space programs.
The segment’s operating profit improved 15% to $312 million. The operating margin expanded 30 bps to 9.9% in the quarter under review.
Rotary and Mission Systems: Quarterly revenues decreased 3% to $3.90 billion on a year-over-year basis. This was primarily due to lower sales from Sikorsky helicopter program on account of lower production volume for Black Hawk helicopters.
The segment’s operating profit declined 2% to $454 million in the reported quarter. The operating margin expanded 10 bps to 11.6% in the same time frame.
Financial Condition
Lockheed’s cash and cash equivalents totaled $3.67 billion at the end of second-quarter 2023 compared with $2.55 billion at the end of 2022.
Cash from operating activities amounted to $2.66 billion during the first six months of 2023 compared with $2.77 billion in the year-ago period.
Long-term debt as of Jun 30, 2023, totaled $17.26 billion, up from $15.43 billion as of Dec 31, 2022.
2023 Guidance
Lockheed has partly raised its financial guidance for 2023. The company now expects revenues of $66.25-$66.75 billion compared with its earlier projection of $65-66 billion. The Zacks Consensus Estimate for full-year revenues is pegged at $65.77 billion, which lies lower than the company’s guided range.
LMT now expects earnings per share (EPS) in the range of $27.00-$27.20, up from the prior guidance of $26.60-$26.90. The Zacks Consensus Estimate for the company’s full-year EPS is pinned at $27.06, lower than the mid-point of the company’s guided range.
Lockheed, however, still expects to generate free cash flow of $6.2 billion during 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Lockheed has a subpar Growth Score of D, a grade with the same score on the momentum front. However, 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 C. 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.