Are Tides Turning For Lockheed Martin Stock?

by Trefis Team
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In a recent announcement, Lockheed Martin (NYSE: LMT) raised its quarterly dividend by 7% to $2.80 and authorized an additional $5 billion to its share repurchase program. The stock has been underperforming broader markets in recent months despite reporting healthy growth numbers in H1 2021. Moreover, the current dividend yield of 3.2% along with the current valuation multiple (P/E) as highlighted in our previous article, Lockheed Martin Stock A Value?, indicates more room for growth. According to the Trefis Machine Learning Engine, which identifies trends in a company’s historical stock price data, LMT stock will likely gain 1.1% over the next one-month (twenty-one trading days) considering last week’s (five trading days) positive trajectory.

But how would these numbers change if you are interested in holding Lockheed Martin stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Lockheed Martin stock price forecast after a rise or fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF LMT stock moved by -5% over five trading days, THEN over the next twenty-one trading days, LMT stock moves an average of 3.4%, with a 64.8% probability of a positive return over this period.

Also, given a -5% movement for the stock over 5 trading days, it has historically witnessed an excess return of 0.9% compared to the S&P500 over the next 21 trading days, with a 56.3% percent probability of a positive excess return.

Some Fun Scenarios, FAQs & Making Sense of Lockheed Martin Stock Movements:

Question 1: Is the average return for Lockheed Martin stock higher after a drop?

Answer: Consider two situations,

Case 1: Lockheed Martin stock drops by -5% or more in a week

Case 2: Lockheed Martin stock rises by 5% or more in a week

Is the price forecast for Lockheed Martin stock higher over the subsequent month after Case 1 or Case 2?

LMT stock fares better after Case 1, with an expected return of 3.4% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an expected return of 0.9% for Case 2. This implies a price forecast of $356 in Case 1 and a figure of $347 in Case 2 using LMT market price of $344.20 on 9/24/2021.

In comparison, the S&P 500 has an expected return of 3.1% over the next 21 trading days under Case 1, and an expected return of just 0.5% for Case 2 as detailed in our dashboard that details the expected return for the S&P 500 after a rise or drop.

Try the Trefis machine learning engine above to see for yourself how the forecast for Lockheed Martin stock is likely to changes after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold Lockheed Martin stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For LMT stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for Lockheed Martin after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The expected return after a rise is understandably lower than after a drop as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

LMT’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Lockheed Martin stock by changing the inputs in the charts above. (related: Lockheed Martin Stock Remains A Good Bet)

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