What To Expect From Lockheed Martin’s Q1?

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Lockheed Martin

Lockheed Martin (NYSE: LMT) is scheduled to report its Q1 2022 results on Tuesday, April 19. We expect Lockheed Martin to likely post revenue and earnings above the street expectations. The company expects low single-digit growth in revenues and profits in the coming years. However, given the Ukraine crisis, there has been an increased focus on the defense sector stocks, including LMT. New business awards are likely to drive the company’s performance in the near term, with possible increased defense spending by NATO members. Although we expect the company to navigate well over the latest quarter, our forecast indicates that LMT stock is fully valued at its current levels, as discussed below. Our interactive dashboard analysis of Lockheed Martin Earnings Preview has additional details.

(1) Revenues expected to be above the consensus estimates

  • Trefis estimates Lockheed Martin’s Q1 2022 revenues to be around $15.7 billion, slightly above the $15.6 billion consensus estimate.
  • With the rising macroeconomic tensions, it is likely that governments will resort to increased spending on defense, and Lockheed Martin should benefit from the same.
  • Looking at Q4 2021, the company saw its sales grow 4% y-o-y to $17.7 billion. This growth was led by Missiles and Fire Control products, growing at 12%, while Aeronautics, and Rotary and Mission Systems segments saw 6% growth each, offsetting a 10% decline in Space segment revenues.
  • Our dashboard on Lockheed Martin Revenues has more details.
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(2) EPS likely to be above the consensus estimates

  • Lockheed Martin’s Q1 2022 adjusted earnings per share (EPS) is expected to be $6.25 per Trefis analysis, slightly above the consensus estimate of $6.21.
  • The company’s adjusted net income of $2.0 billion in Q4 2021 reflected a 14% rise from its $1.8 billion figure in the prior-year quarter, driven by sales growth and margin expansion.
  • The company’s operating margins expanded 40 bps y-o-y to 13.8% in Q4, and it spent $4.1 billion on share repurchases in 2021, aiding its EPS growth.
  • Our dashboard on Lockheed Martin’s Operating Income has more details.
  • For the full-year 2022, we expect the adjusted EPS to be higher at $27.00 compared to EPS of $22.76 in 2021.

(3) Stock price estimate in-line with the current market price

  • We estimate Lockheed Martin’s Valuation to be around $456 per share, which aligns with the current market price of $468.
  • This represents a forward P/E multiple of 16.9x for the company based on our 2022 EPS forecast of $27.00.
  • While we expect the company to see steady earnings growth over the coming years, driven by increased defense spending globally, LMT stock appears to be fully priced at current levels. We believe that investors may be better off waiting for a dip to buy the stock for higher gains.

While LMT stock looks fully valued, it is helpful to see how Lockheed Martin Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Lockheed Martin vs. Ingevity.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Apr 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 LMT Return 6% 32% 87%
 S&P 500 Return -2% -7% 99%
 Trefis Multi-Strategy Portfolio -1% -9% 259%

[1] Month-to-date and year-to-date as of 4/18/2022
[2] Cumulative total returns since the end of 2016

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