Lockheed Martin (NYSE: LMT) will report its Q1 2023 results on Tuesday, April 18. We expect it to post downbeat results, with its revenue falling in line and earnings slightly below the street expectations. Supply chain constraints and elevated costs will likely pressure the company’s earnings. Not only do we expect the company to post a downbeat Q1, 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 in line with the consensus estimates
- Trefis estimates Lockheed Martin’s Q1 2023 revenues to be $15.0 billion, aligning with the levels seen in the last year’s quarter and the consensus estimate.
- Looking at Q4 2022, the company saw its sales rise 7% y-o-y to $19 billion. The growth was led by Aeronautics, Rotary & Mission Systems, and Space segments, up 7%, 8%, and 12%, respectively.
- A higher volume of production contracts for F-35 and the national security space program led the sales growth. This trend is expected to continue in the near term.
- Our dashboard on Lockheed Martin Revenues has more details on the company’s segments.
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(2) EPS likely to be below the consensus estimates
- Lockheed Martin’s Q1 2023 adjusted earnings per share (EPS) is expected to be $6.02 per Trefis analysis, slightly below the consensus estimate of $6.06.
- The company’s net income of $2.0 billion in Q4 2022 reflected a 2% y-o-y rise, as a decline in net margin partly offset higher sales.
- For the full-year 2023, we expect the adjusted EPS to be higher at $26.67 compared to $21.66 in 2022.
(3) LMT stock looks reasonably valued
- We estimate Lockheed Martin’s Valuation to be around $485 per share, which aligns with the current market price of $488, implying that investors may be better off waiting for a dip to enter LMT stock for better gains in the long run.
- At its current levels, LMT stock is already trading at 18x the forward EPS estimate of $26.67, compared to the last three-year average of 17x.
- However, if the company reports upbeat Q1 results and provides a 2023 outlook better than the street estimates, the P/E multiple will likely be revised upward, resulting in higher levels for LMT stock.
Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Herbalife vs. Jacobs Engineering Group.
Despite inflation rising and the Fed raising interest rates, among other factors, LMT stock has risen <1% this year. But can it drop from here? See how low Lockheed Martin stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.
|S&P 500 Return||0%||7%||83%|
|Trefis Multi-Strategy Portfolio||0%||8%||239%|
 Month-to-date and year-to-date as of 4/13/2023
 Cumulative total returns since the end of 2016