Lockheed Martin a buy?

Its 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: $394.08

52/Wk High: $442.532

52/Wk Low: $266.11


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;


  • Aeronautics

  • Missiles and Fire Control

  • Rotary and Mission Systems

  • Space Systems


Recently Lockheed Martin has landed several great contracts. $LMT locked in a government contract worth $15 billion for work on the US C-130J tactical transport fleet weeks ago.


Secondly in the earnings call the CEO teased a deal dubbed the “5G.mil” deal. Many speculate that the tease was implying that Lockheed Martin is cooking up a 5G technology push.


Getting onto the fundamentals the earnings and outlook released on Tuesday look phenomenal.


$LMT reported a beat on Tuesday with a Q2 EPS of $5.79 versus the consensus of $5.72 on EPS. Secondly, revenue came in at a whopping $16.2 billion for Q2 beating the consensus of $15.24 billion.


Digging deeper into the earnings we see that the EPS grew 22.6% and revenue increased 12.4%.


Once broken down by sector the gains really shine;


  • Aeronautics grew 17% to $6.5 billion in sales.

  • Missile and fire grew 16% to $2.8 billion in sales.

  • Rotary and mission systems grew 7% to $4.04 billion in sales.

  • Space Systems grew 7% to $2.88 billion in sales.


In all Lockheed reported a sales gain of 12% total and a 15% gain in operating profits.


These massive gains across the board are great but the outlook is even better. Lockheed Martin’s management increased yearly guidance on revenue, earnings, and cash.


$LMT forecasts expected earnings of $23.75 to $24.05 per share for the year in total. Not only that but management also believes yearly revenue will be larger than first expected and now believes $63.5 billion to $65 billion is a better target.


Finally, in the case of any potential issues in the future, Lockheed Martin currently has a huge $150 billion order backlog.


Moving onto the analysts it seems the consensus is very bullish. Currently, the mean price target is $421.78/share, representing a respectable 7.03% upside. Secondly, the high PT is $475/share and low is $395/share so analysts are across the board bullish.


The big money is also bullish on $LMT as well. Currently, 75.26% of common stock is owned by institutions. Top holders include Black Rock, BofA Global Research, and State Street Global Advisors.


Finally, I must note that while $LMT has done remarkable through COVID-19 it has seen some slowdown. The company expects its F-35 deliveries to be down slightly and reported a 15% cut in expected production of the F-35.


The technicals also look in considerably good condition still. At its current price point, the stock is still far off pre-COVID highs of $442.5322/share and has run sideways for the past several months. After the most recent report it seems it could break out and move to new highs.


In short, I like the stock and if the opportunity comes along I am a buyer. I think its current price point is still a respectable buying point at $394.08/share but it’s gone on a massive run and might cool off for a short time.


EAT - SLEEP - PROFIT


Disclaimer: This is not direct financial advice, simply opinion based on independent research.