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Lockheed Martin (LMT) Beats on Q1 Earnings, Backlog Drops
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Pentagon’s prime defense contractor, Lockheed Martin Corp. (LMT - Free Report) reported first-quarter 2017 earnings from continuing operations of $3 per share, beating the Zacks Consensus Estimate of $2.76 by 8.7%. Earnings came in line with the year-ago period’s bottom line figure.
Operational Highlights
In the reported quarter, total revenue came in at $11.06 billion, missing the Zacks Consensus Estimate of $11.26 billion by 1.8%.
However, the company’s revenues increased 6.6% from $10.37 billion a year ago. Notably, all segments registered year-over-year growth in sales.
Lockheed Martin Corporation Price, Consensus and EPS Surprise
Lockheed Martin ended the first quarter (on Mar 26, 2017) with $93.5 billion in backlog, down 2.8% from $96.2 billion at 2016-end. Of this, the Aeronautics segment accounted for $32 billion while Rotary and Mission Systems contributed $27.5 billion. Also, $19.5 billion came from Space Systems and $14.5 billion from Missiles and Fire Control.
Segmental Performance
Aeronautics: Sales increased 8% year over year to $4.1 billion, driven by higher net sales for the F-35 as well as F-16 programs.
Operating profit also advanced 4% year over year to $436 million, while operating margin dropped 50 basis points (bps) to 10.6%.
Missiles and Fire Control: Quarterly sales improved 4% year over year to $1.5 billion due to higher sales for fire control programs as well as air and missile defense programs.
Operating profit dropped 0.9% year over year to $219 million and operating margin contracted 70 bps to 14.7%.
Rotary and Mission Systems: Quarterly sales of $3.1 billion increased 3% from the prior-year quarter on higher revenues from Sikorsky.
Operating profit declined 53% year over year to $108 million, while operating margin contracted 410 bps to 3.5%.
Space Systems: Sales increased 11% year over year to about $2.4 billion in the first quarter, driven by sales improvement owing to the company’s increased interest in Atomic Weapons Establishment Venture.
Operating profit increased 18% to $288 million while operating margin improved 70 bps to 12.2% in the quarter.
Financial Condition
Cash and cash equivalents were $2.22 billion as of Mar 26, 2017, compared with $1.84 billion at the end of 2016. Long-term debt was $14.28 billion, almost in line with the 2016-end level.
Cash from operations at the end of the first quarter remained flat at $1.67 billion, compared to 2016-end level.
During the quarter, the company repurchased 1.9 million shares for $500 million compared with the buyback of 2.4 million shares for $501 million a year ago. The company paid dividends worth $544 million to its shareholders, compared to the year ago period’s level of $533 million.
Guidance
For 2017, Lockheed Martin has revised its financial guidance. The company expects to generate revenues in the range of $49.5–$50.7 billion, higher than the earlier provided projection of $49.4–$50.6 billion.
On the bottom-line front, the company now expects its earnings per share to be in the range of $12.15–$12.45 during 2017, lower than the earlier announced guidance of $12.25–$12.55.
The company has also raised its 2017 expectations for cash from operations. Lockheed Martin projects to generate more than $6 billion cash from operations, compared to earlier projection of more than $5.7 billion.
Zacks Rank
Lockheed Martin carries a Zacks Rank #2 (Buy).
Upcoming Peer Releases
Northrop Grumman Corp. (NOC - Free Report) is expected to report first-quarter 2017 results on Apr 26. The company has an Earnings ESP of +1.03% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The Boeing Company (BA - Free Report) is expected to report first-quarter 2017 results on Apr 26. The company has an Earnings ESP of +0.52% and a Zacks Rank #3 (Hold).
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Lockheed Martin (LMT) Beats on Q1 Earnings, Backlog Drops
Pentagon’s prime defense contractor, Lockheed Martin Corp. (LMT - Free Report) reported first-quarter 2017 earnings from continuing operations of $3 per share, beating the Zacks Consensus Estimate of $2.76 by 8.7%. Earnings came in line with the year-ago period’s bottom line figure.
Operational Highlights
In the reported quarter, total revenue came in at $11.06 billion, missing the Zacks Consensus Estimate of $11.26 billion by 1.8%.
However, the company’s revenues increased 6.6% from $10.37 billion a year ago. Notably, all segments registered year-over-year growth in sales.
Lockheed Martin Corporation Price, Consensus and EPS Surprise
Lockheed Martin Corporation Price, Consensus and EPS Surprise | Lockheed Martin Corporation Quote
Backlog
Lockheed Martin ended the first quarter (on Mar 26, 2017) with $93.5 billion in backlog, down 2.8% from $96.2 billion at 2016-end. Of this, the Aeronautics segment accounted for $32 billion while Rotary and Mission Systems contributed $27.5 billion. Also, $19.5 billion came from Space Systems and $14.5 billion from Missiles and Fire Control.
Segmental Performance
Aeronautics: Sales increased 8% year over year to $4.1 billion, driven by higher net sales for the F-35 as well as F-16 programs.
Operating profit also advanced 4% year over year to $436 million, while operating margin dropped 50 basis points (bps) to 10.6%.
Missiles and Fire Control: Quarterly sales improved 4% year over year to $1.5 billion due to higher sales for fire control programs as well as air and missile defense programs.
Operating profit dropped 0.9% year over year to $219 million and operating margin contracted 70 bps to 14.7%.
Rotary and Mission Systems: Quarterly sales of $3.1 billion increased 3% from the prior-year quarter on higher revenues from Sikorsky.
Operating profit declined 53% year over year to $108 million, while operating margin contracted 410 bps to 3.5%.
Space Systems: Sales increased 11% year over year to about $2.4 billion in the first quarter, driven by sales improvement owing to the company’s increased interest in Atomic Weapons Establishment Venture.
Operating profit increased 18% to $288 million while operating margin improved 70 bps to 12.2% in the quarter.
Financial Condition
Cash and cash equivalents were $2.22 billion as of Mar 26, 2017, compared with $1.84 billion at the end of 2016. Long-term debt was $14.28 billion, almost in line with the 2016-end level.
Cash from operations at the end of the first quarter remained flat at $1.67 billion, compared to 2016-end level.
During the quarter, the company repurchased 1.9 million shares for $500 million compared with the buyback of 2.4 million shares for $501 million a year ago. The company paid dividends worth $544 million to its shareholders, compared to the year ago period’s level of $533 million.
Guidance
For 2017, Lockheed Martin has revised its financial guidance. The company expects to generate revenues in the range of $49.5–$50.7 billion, higher than the earlier provided projection of $49.4–$50.6 billion.
On the bottom-line front, the company now expects its earnings per share to be in the range of $12.15–$12.45 during 2017, lower than the earlier announced guidance of $12.25–$12.55.
The company has also raised its 2017 expectations for cash from operations. Lockheed Martin projects to generate more than $6 billion cash from operations, compared to earlier projection of more than $5.7 billion.
Zacks Rank
Lockheed Martin carries a Zacks Rank #2 (Buy).
Upcoming Peer Releases
Northrop Grumman Corp. (NOC - Free Report) is expected to report first-quarter 2017 results on Apr 26. The company has an Earnings ESP of +1.03% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Leidos Holdings, Inc. (LDOS - Free Report) is expected to report first-quarter 2017 results on May 4. The company has an Earnings ESP of +1.28% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Boeing Company (BA - Free Report) is expected to report first-quarter 2017 results on Apr 26. The company has an Earnings ESP of +0.52% and a Zacks Rank #3 (Hold).
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>