TDG, GD Look Smarter Buy Than Lockheed Martin Stock
TDG, GD are Lockheed Martin’s peers in Aerospace & Defense industry that have:
1) Lower valuation (P/OpInc) compared to Lockheed Martin stock
2) But higher revenue and operating income growth
This disconnect between valuation and performance could mean that you are better off buying TDG, GD stocks vs. LMT stock
Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Trefis works with Empirical Asset Management – a Boston area wealth manager – whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has incorporated the Trefis HQ Portfolio in this asset allocation framework to provide clients better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
- Can Lockheed Martin Stock Recover If Markets Fall?
- GD Tops Lockheed Martin Stock on Price & Potential
- How Will Lockheed Martin Stock React To Its Upcoming Earnings?
- Better Bet Than Lockheed Martin Stock: Pay Less To Get More From TDG, GD
- Better Bet Than Lockheed Martin Stock: Pay Less To Get More From GD
- LMT At Price Support Zone, Right Time To Buy?
Key Metrics Compared
| Metric | LMT | TDG | GD |
|---|---|---|---|
| P/OpInc* | 19.5x | 19.4x | 17.6x |
| LTM OpInc Growth | -31.3% | 14.3% | 14.1% |
| 3Y Avg OpInc Growth | -11.0% | 24.1% | 7.7% |
| LTM Revenue Growth | 1.1% | 12.8% | 11.9% |
| 3Y Avg Revenue Growth | 3.9% | 18.2% | 9.4% |
OpInc = Operating Income, P/OpInc = Price To Operating Income Ratio
But do these numbers tell the full story? Read Buy or Sell LMT Stock to see if Lockheed Martin still has an edge that holds up under the hood. As a quick background, Lockheed Martin (LMT) provides research, design, development, and integration of technology systems across aeronautics, missiles, rotary missions, and space, including satellites, space transport, and advanced missile systems.
This is just one approach to evaluate investments. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
Is The Mismatch In Stock Price Temporary
One way to check if Lockheed Martin stock is expensive now versus the other tickers would be to see how these metrics compared across companies exactly a year ago. Specifically, if there has been a marked reversal in the trend for Lockheed Martin in the last 12 months, then there is a chance that the current mismatch is likely to reverse. On the other hand, a persistent underperformance in revenue and operating income growth for Lockheed Martin would reinforce the conclusion that the stock is expensive compared to its peers, but may not revert soon
Key Metrics Compared 1 Yr Prior
| Metric | LMT | TDG | GD |
|---|---|---|---|
| P/OpInc* | 17.8x | 18.9x | 16x |
| LTM OpInc Growth | -14.4% | 17.3% | 15.8% |
| 3Y Avg OpInc Growth | -5.9% | 26.2% | 6.9% |
| LTM Revenue Growth | 3.1% | 14.8% | 14.1% |
| 3Y Avg Revenue Growth | 3.0% | 18.7% | 8.6% |
OpInc = Operating Income
Additional Metrics To Consider
| Metric | LMT | TDG | GD |
|---|---|---|---|
| P/S | 1.6x | 9.0x | 1.8x |
| Market Cap (Current) | $ 114.3 Bil | $ 77.2 Bil | $ 91.4 Bil |
| LTM Revenue | $ 71.84 Bil | $ 8.58 Bil | $ 50.27 Bil |
| LTM Opinc | $ 5.86 Bil | $ 3.98 Bil | $ 5.18 Bil |
| LTM Op Margin | 8.2% | 46.4% | 10.3% |
OpInc = Operating Income
Alternate buying based on valuation, while attractive, needs to be evaluated carefully from multiple angles. Such multi-factor analysis is exactly how we construct Trefis portfolio strategies. If you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.