Military
Why Investors Are Not Crazy About Lockheed Martin Earnings or Forecast
![](https://a673b.bigscoots-temp.com/wp-content/uploads/2020/05/imageForEntry8-mN6.jpg)
Published:
Lockheed Martin Corp. (NYSE: LMT) reported third-quarter results before markets opened Tuesday. The country’s largest defense contractor reported earnings per share (EPS) of $6.25 on sales of $16.5 billion. In the year-ago quarter, Lockheed reported EPS of $5.66 and sales of $15.2 billion. Analysts had forecast EPS of $6.09 and sales of $16.12 billion for the quarter.
Cash from operations fell from $2.5 billion in 2019 to $1.9 billion in the quarter and for the first three quarters of the year, and operating cash flow rose from $5.8 billion a year ago to $6.4 billion.
In its financial outlook for the current fiscal year, Lockheed raised its revenue guidance from a range of $63.5 billion to $65 billion to a new estimate of $65.3 billion. The company also increased its profit estimate from a range of $6.9 billion to $7.05 billion to a new estimate of $7.13 billion. Diluted EPS, previously forecast in a range of $23.75 to $24.05, is now expected to be $24.45. Cash flow from operations continues to be forecast at $8 billion.
Looking ahead to fiscal 2021, Lockheed expects full-year sales of at least $67 billion and operating margin of 10.9% to 11.1%. Cash flow from operations is forecast at $8.1 billion, net of a planned $1 billion contribution to the company’s pension fund.
Analysts had forecast fourth-quarter EPS at $6.24 on revenue of $16.64 billion. Full-year EPS had been estimated at $24.17 on sales of $64.6 billion. Fiscal 2021 estimates called for EPS of $26.66 and sales of $68 billion.
Lockheed paid cash dividends of $672 million in the third quarter and repurchased 200,000 shares of stock for $85 million. The company increased its quarterly dividend by 20 cents a share to $2.60 beginning in the fourth quarter. Lockheed increased its share buyback authority by $1.3 billion and now has $3 billion available to repurchase shares.
All four of the company’s operating segments posted year-over-year sales increases and only the space segment showed a decline in profit. Total operating profit for the quarter totaled $2.15 billion, up from $2.11 billion a year ago, but operating profit for the year through the end of the quarter is down from $6.4 billion to $6.36 billion.
Sales of the company’s F-35 rose to about $325 million in the quarter, and classified development contract payments rose by around $130 million. Sales of tactical and strike missiles rose by about $250 million, and revenue was up about $200 million for integrated air and missile defense programs.
The decline in the space segment’s operating profit was attributed to a $50 million decrease in equity earnings from the company’s investment in the United Launch Alliance and other declines totaling around $65 million.
Overall, the quarterly numbers were good, but Lockheed’s outlook for the full 2020 fiscal year is a bit short of analysts’ estimates and the company’s 2021 forecast is also short of expectations.
Shares traded down fractionally early Tuesday at $381.19, in a 52-week range of $266.11 to $442.53. The consensus 12-month price target on the stock is $435.95. Lockheed pays a dividend yield of 2.71%.
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.