What To Expect From Lockheed’s Q1 Earnings?

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Lockheed Martin

Lockheed Martin (NYSE: LMT) posted rather strong earnings last time around. Barring a one-time charge of about $1.9 billion on the recent tax reform, the company managed to post an increase of about 25% in earnings year over year at $3.87 (adjusted number of $4.30), however, the unadjusted figure fell short of analyst estimates. Further, the defense giant also posted a near 10% increase in revenues in comparison to the same period last year. We expect this momentum to continue well into 2018, as well. In this respect, the company decided to communicate a rather optimistic guidance. Lockheed expects full year earnings in the coming financial year to lie between $15.20-$15.50 a share, while revenues come in around $50 billion to $51.5 billion. In comparison, analysts had expected earnings of $14 per share on sales of $51.53 billion.

At the moment, we believe Lockheed’s current price is nearly at par with our estimates. In this respect, we have created an interactive dashboard analysis to estimate the company’s valuation based on its expected revenue for FY 2018. Click on the link to modify the figures to arrive at your own price estimate.

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By the way things have already set themselves up so far, 2018 is expected to be a great year for defense giants like LMT.

  • The recent spate of global political uncertainty has pushed many countries to revise their defense budgets upwards. In this respect, in late March, the Trump administration approved and signed a bill to increase the U.S. defense budget by about $80 billion to a record $700 billion. This increased budget means more opportunities for companies like Lockheed.
  • Further, since the beginning of April, the company has announced a large number of updates regarding the current state and the future of its most profitable projects. The company’s F-35 project is set to take new heights this year following tests which are likely to push the program into full scale production soon. We expect the program to be a robust revenue maker going forward.
  • The company is also expected to benefit greatly from the recent new tax law which is expected to help increase profits significantly in the year. The upcoming earnings call could help shed some more light on the actual extent to which earnings are going to benefit.
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