How Did Lockheed Martin Perform In Q1?

+7.78%
Upside
455
Market
490
Trefis
LMT: Lockheed Martin logo
LMT
Lockheed Martin

Lockheed Martin (NYSE: LMT) posted a rather stellar earnings this time around, while raising its 2018 outlook notably. The company managed to beat both, the revenue and earnings estimate, comfortably, by quite a large margin. The top and bottom lines in the quarter were boosted on strong performance across all segments, most notably Aeronautics and Missiles & Fire Control.

Despite this, shares of the defense giant fell dramatically post the call as management forecast cash flow problems going forward. The company lost over 6% of its valuation through the day. That said, we believe that the market may have punished the stock unfairly, and expect it to return to a fair price of around $345 soon. In this respect, we have created an interactive dashboard to best elaborate on our valuation method and reasoning. Please click on the link to change drivers and come up with your own price estimate.

  • As mentioned above, management decided to up its outlook for 2018 by a significant margin. For the full year, Lockheed now expects 2018 sales to lie in the range of $50.35 billion to $51.85 billion, compared to its previous guidance of $50 billion to $51.5 billion, while earnings are now anticipated to be between $15.80 and $16.10 a share, up from $15.20 and $15.50. That said, cash flows were the only financial metric that the company decided to keep unchanged at $3 billion. This was primarily because it estimates increased pension contributions to result in negative cash from operations in Q2. This announcement sent investors into a selling frenzy which depleted the company’s valuation by nearly 6 percentage points.
  • On the positive side, Lockheed saw revenues improve across all its key segments. Most notably, the aeronautics division recorded a near 7% increase in its top line year over year, largely due to a $185 million increase in sales related to the F-35 program. At the moment, the company is tied up in negotiations with the Pentagon over the cost of the next batch of about 130 F-35s. While these negotiations may last a while, once approved, the division will see its revenues benefit greatly. Another winner in the quarter was Missiles & Fire Control, which recorded a revenue increase of about 8% to $128 million on higher net sales of classified programs and increased volumes of the Long Range Stand Off (LRSO) missile and Joint Air-to-Surface Standoff Missile (JASSM).
Relevant Articles
  1. Should You Pick Lockheed Martin Stock At $430 After Q4 Beat?
  2. Down 20% This Year Is RTX A Better Pick Over Lockheed Martin Stock?
  3. After An 8% Rise In A Month What’s Next For Lockheed Martin Stock
  4. Which Is A Better Pick – Lockheed Martin Stock Or Starbucks?
  5. Why The Space Theme Is Underperforming This Year
  6. Here’s What We Expect From Lockheed Martin’s Q2

 

What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | 

Product, R&D, and Marketing TeamsMore Trefis Research

Like our charts? Explore example interactive dashboards and create your own.