It's time to talk about an aerospace name I believe has real potential for gains! Here is the breakdown on $LMT otherwise known as Lockheed Martin.
Current Price: $380.77
52/Wk High: $442.5322
52/Wk Low: $266.11
Market Cap: $105.9 billion
Dividend (Quarterly): $2.60 / Yield: 2.75%
Read below for the breakdown!
One of the most well know aerospace companies around Lockheed Martin recently reported earnings and delivered, but first, let’s get into the fundamentals of the company.
$LMT is an aerospace and security company. Currently, Lockheed has four core segments in which daily business runs;
Missiles and Fire Control
Rotary and Mission Systems
Breaking the stock price down by segment the price itself is well diversified. According to TREFIS (@trefis) research, 37.90% of the stock price is based on Lockheed Martin’s Aeronautics segment.
Furthermore, 21.66% is based on their Space Systems segment, 20.33% is based on their Mission Systems & Training segment, and finally, 20.1% of the stock price is based on the company’s Missiles & Fire Control segment.
In recent news, Lockheed Martin has also been expanding the portfolio through the acquisition of Integration Innovation’s Hypersonics portfolio.
According to Lockheed the acquisition “expands Lockheed Martin's capabilities to design, develop and product integrated hypersonic weapon systems for its customers,” (DowJonesNewswires).
Digging into the company’s core segments and areas of production Lockheed’s F-35 program has seen a 32% increase in the budget since 2015 and the program is the company’s largest revenue generator (TREFIS).
Other notable areas of production for Lockheed also include both the Black Hawk program and the Terminal High Altitude Area Defense (THAAD) program.
Taking a look at the numbers, Lockheed continues to see consistent growth, delivering their eighth beat in a row in Q3 with an EPS of $6.25 versus the analyst’s consensus EPS estimate of $6.09.
Revenues and net sales have also continued to grow, with Q3 net sales totaling a record $16.5 billion, representing a 9% year over year gain.
Lockheed Martin also reported a strong segment operating profit of $1.8 billion and generated $1.9 billion in cash from operations throughout the quarter.
It is also important to touch on Lockheeds record backlog for the ninth quarter in a row, with the backlog now totaling $150.4 billion.
Lockheed not only delivered strong numbers but also increased the dividend rate to $2.60/share, making the stock even more attractive from the dividend side of things.
Lockheed management also produced their 2021 outlook for the company, delivering expectations of $67 billion or more for 2021 sales and the expectation that the 2021 segment operating margin will land between 10.9% to 11.1%.
Taking a look at the balance sheet, Lockheed Martin continues to maintain a solid standing.
Total Debt: $12.675 billion
Total Liabilities: $45.820 billion
Total Assets: $50.773 billion
Cash & Short Term Inv: $3.585 billion
When it comes to valuation, Lockheed is not badly priced and continues to show solid potential.
Price to Earnings: 15.85x
Price to Sales: 1.62x
Price to Book: 20.95x
Price to Cash Flow: 12.48x
Not only is the valuation quite solid but management continues to show its effectiveness.
Return on Equity: 149.08%
Return on Assets: 13.18%
Return on Invested Capital: 19.04%
Taking in the numbers the analysts maintain a very bullish view on Lockheed Martin with the current mean price target sitting at $442.20/share, representing a 16.88% upside.
Lockheed Martins’s high price target is $509.00/share, representing a 34.54% gain, while the low price target is $410.00/share, representing 8.37% upside.
The big money is quite involved as well, with 74.10% of $LMT being owned by institutions. Top holders include State Street Global Advisors, The Vanguard Group, and BlackRock Institutional Trust.
From a technical view, $LMT has been flat in recent months and could be flashing an opportunity. According to the six-month charts, the MACD continues to run within tight sideways momentum around -0.70 to -0.76.
The six-month charts are also indicating an RSI of 55.30 and CCI of 97.30 both of which are on the high side but not too far gone. It is also important to note that $LMT does trade roughly 61 points off its highs.
In short, I like Lockheed Martin for the mid and long term. While it may be flat throughout the short term I believe the company’s consistent growth will push the stock higher in the months to come.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.