Lockheed Martin Q3 Earnings: Shares Slip Despite Guidance Boost

Lockheed Martin (NYSE: LMT) reported a mixed Q3 earnings this time around. The company missed on expected earnings marginally, while revenues missed the expectation significantly. However, the company believes that this shortfall is only timing related, and that it will more than make up for it in the fourth quarter. Despite this clarification, Lockheed’s stock price fell by about 2% post the earnings call.

The negatives aside, the defense giant managed to achieve a record backlog of over $104 billion in the quarter, representing a strong demand for Lockheed products and services across the board. Consequently, the company is well on track to produce over $6 billion in cash this year.

Points To Note:

• Despite falling short of expectations, the company’s revenue came in 5% higher in comparison to the year ago period. The top line was buoyed by a significant 16% jump in sales at Aeronautics. In the quarter, the State Department finally approved the sale of F-16 upgrades and new aircraft to the government of Bahrain. The company has now been tasked with reconfiguring Bahrain’s current fleet of 20 F-16 aircraft to the new Viper system. This project is expected to rake in over $1 billion in revenues for the company. Additionally, LMT won a contract to supply the government of Bahrain with 19 new F-16 Viper aircraft, worth approximately $2.8 billion. This just goes to show that despite heavy demand for the F-35, the F-16 is still holding its ground.
• As mentioned previously, the corporation managed to achieve a record backlog of nearly $104 billion this quarter, crossing the $100 billion mark for the first time in its history. This was only made possible thanks to two major contracts that were awarded to the company in Q3. First, the company received approval on the production of the next lot of the F-35 aircraft from the Pentagon. Second, Lockheed was awarded a multi-year contract to provide the army with Black Hawk helicopters. Given the current global defense climate, we can expect the order book to swell further in the coming months.
• Furthermore, Lockheed’s management has decided to raise its full-year guidance for earnings significantly. The company now hopes to take in, a significantly higher earnings, between $12.85 to $13.15 per share, up from $12.30 and $12.60 per share. We can expect this momentum to continue well through to the next year as well.

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