After observing a strong rally in March, the shares of Lockheed Martin (NYSE: LMT) have retained their value largely due to multi-year government contracts driving cash flows. Despite the pandemic, the company has been returning cash to shareholders as dividends and share repurchases. The second quarter revenues are likely to observe 5% (y-o-y) growth primarily driven by the Aerospace and Defense segments. Moreover, net earnings are also expected to expand by 15% (y-o-y). We highlight the quarterly trends in revenues, earnings, and valuation multiple in an interactive dashboard analysis, Lockheed Martin Earnings Preview.
How did Lockheed Martin perform in the previous quarter?
In Q1, Lockheed Martin reported 4% (y-o-y) growth in net sales and a 7% (y-o-y) expansion in earnings. The company’s four operating segments, Aeronautics, Missiles, Rotary Systems, and Space observed 1%, 5%, 10%, and 3% (y-o-y) revenue growth, respectively. Notably, the Aeronautics and Missiles segments together contribute 64% of total revenues and around 60% of the total order backlog. In the past few years, the company’s Aeronautics and Missiles segments have remained key revenue and earning drivers. Per Q1 filings, the total order backlog stood at $147 billion.
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Pick the stock due to a favorable dividend yield
Considering a quarterly dividend of $2.60 per share payable and a stock price of $380, the current dividend yield stands at 2.7% ((2.60*4)/380). Thus, the stock is a good pick for investors looking for stable returns. Moreover, the current P/E multiple also stands lower than prior years – indicating room for long-term gains.
Is there a better pick over Lockheed Martin in the defense contracting business? Lockheed Marin Stock Comparison With Peers summarizes how LMT compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.