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Lockheed (LMT) Misses on Q3 Earnings, Raises '17 Outlook
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Lockheed Martin Corp. (LMT - Free Report) reported third-quarter 2017 earnings from continuing operations of $3.24 per share, which missed the Zacks Consensus Estimate of $3.25 by 0.3%. Earnings also declined from the year-ago period’s bottom-line figure by 10.2%.
Operational Highlights
In the reported quarter, total revenues came in at $12.17 billion, which missed the Zacks Consensus Estimate of $12.83 billion by 5.1%.
However, the company’s revenues increased 5.3% from $11.55 billion a year ago. Notably, all segments registered year-over-year growth in sales, except Space Systems.
Lockheed Martin Corporation Price, Consensus and EPS Surprise
Pentagon’s prime defense contractor, Lockheed Martin ended the third quarter (on Sep 24, 2017) with $103.6 billion in backlog, up 12.5% from $92.1 billion at the end of the second quarter. Of this, the Aeronautics segment accounted for $39.5 billion while Rotary and Mission Systems contributed $29.8 billion. Also, $17.5 billion came from Space Systems, and $16.8 billion from Missiles and Fire Control.
Segmental Performance
Aeronautics: Sales increased 14% year over year to $4.8 billion, driven by higher net sales from the F-35 program, on account of higher volume on production and sustainment.
Operating profit also advanced 18% year over year to $517 million, while operating margin dropped 40 basis points (bps) to 10.8%.
Missiles and Fire Control: Quarterly sales rose 3% year over year to $1.8 billion due to higher net sales from tactical missile programs.
Operating profit dropped 7% year over year to $270 million and operating margin contracted 150 bps to 15.1%.
Rotary and Mission Systems: Quarterly sales of $3.4 billion inched up 0.2% on account of higher volume.
Operating profit dropped 1.2% year over year to $244 million, while operating margin contracted a mere 10 bps to 7.3%.
Space Systems: Sales dropped 1% year over year to about $2.3 billion in the third quarter, primarily owing to lower volumes from government satellite programs.
Operating profit declined 52% to $218 million while operating margin contracted 1000 bps to 9.7% in the quarter.
Financial Condition
Cash and cash equivalents were $2.94 billion as of Sep 24, 2017 compared with $1.84 billion as of Dec 31, 2016. Long-term debt was $14.27 billion, compared with $14.28 billion as of Dec 31, 2016.
Cash from operations at the end of the third quarter was $5 billion compared with $4.5 billion at the end of 2016.
During the quarter, the company repurchased 1.6 million shares for $500 million compared with the buyback of 1.2 million shares for $278 million a year ago. The company paid dividends worth $522 million to shareholders compared with the year-ago period figure of $484 million.
Guidance
Lockheed Martin raised its 2017 financial guidance. The company expects to generate revenues in the range of $50.0-$51.2 billion, higher than the earlier provided projection of $49.8-$51.0 billion.
On the bottom-line front, the company now expects its earnings per share to be in the range of $12.85-$13.15 during 2017, higher than the earlier-announced guidance range of $12.30-$12.60.
The company also raised its 2017 expectations for cash from operations. Lockheed Martin currently expects to earn more than $6.2 billion in cash from operations, than the prior guidance of more than $6 billion.
Zacks Rank & Key Pick
Lockheed Martin currently carries a Zacks Rank #4 (Sell).
Boeing has surpassed the Zacks Consensus Estimate in the trailing four quarters, with a positive earnings surprise of 13.67%. The company has a long-term earnings growth rate of 13%.
Upcoming Peer Releases
Huntington Ingalls Industries, Inc. (HII - Free Report) is expected to report third-quarter 2017 results on Nov 8. The company has an Earnings ESPof +2.04% 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 third-quarter 2017 results on Nov 2. The company has an Earnings ESP of +3.75% and a Zacks Rank #3 (Hold).
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And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Lockheed (LMT) Misses on Q3 Earnings, Raises '17 Outlook
Lockheed Martin Corp. (LMT - Free Report) reported third-quarter 2017 earnings from continuing operations of $3.24 per share, which missed the Zacks Consensus Estimate of $3.25 by 0.3%. Earnings also declined from the year-ago period’s bottom-line figure by 10.2%.
Operational Highlights
In the reported quarter, total revenues came in at $12.17 billion, which missed the Zacks Consensus Estimate of $12.83 billion by 5.1%.
However, the company’s revenues increased 5.3% from $11.55 billion a year ago. Notably, all segments registered year-over-year growth in sales, except Space Systems.
Lockheed Martin Corporation Price, Consensus and EPS Surprise
Lockheed Martin Corporation Price, Consensus and EPS Surprise | Lockheed Martin Corporation Quote
Backlog
Pentagon’s prime defense contractor, Lockheed Martin ended the third quarter (on Sep 24, 2017) with $103.6 billion in backlog, up 12.5% from $92.1 billion at the end of the second quarter. Of this, the Aeronautics segment accounted for $39.5 billion while Rotary and Mission Systems contributed $29.8 billion. Also, $17.5 billion came from Space Systems, and $16.8 billion from Missiles and Fire Control.
Segmental Performance
Aeronautics: Sales increased 14% year over year to $4.8 billion, driven by higher net sales from the F-35 program, on account of higher volume on production and sustainment.
Operating profit also advanced 18% year over year to $517 million, while operating margin dropped 40 basis points (bps) to 10.8%.
Missiles and Fire Control: Quarterly sales rose 3% year over year to $1.8 billion due to higher net sales from tactical missile programs.
Operating profit dropped 7% year over year to $270 million and operating margin contracted 150 bps to 15.1%.
Rotary and Mission Systems: Quarterly sales of $3.4 billion inched up 0.2% on account of higher volume.
Operating profit dropped 1.2% year over year to $244 million, while operating margin contracted a mere 10 bps to 7.3%.
Space Systems: Sales dropped 1% year over year to about $2.3 billion in the third quarter, primarily owing to lower volumes from government satellite programs.
Operating profit declined 52% to $218 million while operating margin contracted 1000 bps to 9.7% in the quarter.
Financial Condition
Cash and cash equivalents were $2.94 billion as of Sep 24, 2017 compared with $1.84 billion as of Dec 31, 2016. Long-term debt was $14.27 billion, compared with $14.28 billion as of Dec 31, 2016.
Cash from operations at the end of the third quarter was $5 billion compared with $4.5 billion at the end of 2016.
During the quarter, the company repurchased 1.6 million shares for $500 million compared with the buyback of 1.2 million shares for $278 million a year ago. The company paid dividends worth $522 million to shareholders compared with the year-ago period figure of $484 million.
Guidance
Lockheed Martin raised its 2017 financial guidance. The company expects to generate revenues in the range of $50.0-$51.2 billion, higher than the earlier provided projection of $49.8-$51.0 billion.
On the bottom-line front, the company now expects its earnings per share to be in the range of $12.85-$13.15 during 2017, higher than the earlier-announced guidance range of $12.30-$12.60.
The company also raised its 2017 expectations for cash from operations. Lockheed Martin currently expects to earn more than $6.2 billion in cash from operations, than the prior guidance of more than $6 billion.
Zacks Rank & Key Pick
Lockheed Martin currently carries a Zacks Rank #4 (Sell).
A better-ranked stock in the same space is The Boeing Company (BA - Free Report) , which currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Boeing has surpassed the Zacks Consensus Estimate in the trailing four quarters, with a positive earnings surprise of 13.67%. The company has a long-term earnings growth rate of 13%.
Upcoming Peer Releases
Huntington Ingalls Industries, Inc. (HII - Free Report) is expected to report third-quarter 2017 results on Nov 8. The company has an Earnings ESPof +2.04% 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 third-quarter 2017 results on Nov 2. The company has an Earnings ESP of +3.75% and a Zacks Rank #3 (Hold).
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>