Lockheed Martin Goes Boom

Leo Nelissen
07-24

Summary

  • Lockheed Martin Corporation has shown remarkable performance, outperforming the S&P 500 by 60 points over the past decade.
  • The company's recent 2Q24 earnings report revealed strong revenue growth, an impressive backlog, and progress in the F-35 program.
  • Lockheed Martin's raised guidance, stock buybacks, and commitment to R&D indicate renewed momentum and potential for sustainable long-term gains.

inhauscreative

Introduction

It's time to talk about Lockheed Martin Corporation (NYSE:LMT), a company that was my biggest holding until I bought the Texas Pacific Land Corporation (TPL) this year.

During the pandemic, I started accumulating LMT stock for a number of reasons, including

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Lockheed Is Back!

FinChat

Lockheed Martin

The first fully capable TR-3 jets were supposed to be delivered in July 2023, but the program has been dogged by problems with the new software and a new integrated core processor for combat missions. The plane needs the full upgrade before it can carry more long-range precision weapons, gather more information on enemy aircraft and air defenses and operate more effectively with other aircraft. - Bloomberg

We continue to produce at a rate of 156 aircraft per year and expect to deliver 75 to 100 aircraft in the second half of 2024. Over 95% of TR-3 capabilities are currently being flight-tested, and we look forward to delivering full TR-3 combat capability to the customer. In addition, we expect deliveries of F-35 aircraft to exceed production for the next few years. - LMT 2Q24 Earnings Call

The Times Of Israel

This [GMARS] is a highly interoperable 2-pod launcher system intended to fire the MLRS-based munitions. Combining these combat-proven systems will help address the growing demand for long-range rocket capabilities in Europe and elsewhere. - LMT 2Q24 Earnings Call

Department of Defense

Lockheed Martin

Lockheed Martin

Great News For Shareholders

Lockheed Martin

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Valuation

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Takeaway

Pros & Cons

  • Strong Recent Performance: Lockheed Martin's 2Q24 earnings were stellar, with revenue up 9% year-over-year and impressive growth across all segments.
  • Robust Backlog: A backlog of almost $160 billion highlights solid future revenue visibility and operational strength.
  • F-35 Program Recovery: Significant progress in the F-35 program and optimistic delivery forecasts support future growth.
  • Attractive Valuation: Despite recent gains, the stock's valuation remains appealing.
  • Shareholder Returns: The company is aggressively buying back stock and maintains a reliable dividend with a history of consistent hikes.
  • Ongoing Supply Chain Issues: Despite improvements, supply chain challenges and F-35 delivery bottlenecks still pose risks.
  • Mixed Recent Earnings: The past 2-3 years have seen earnings volatility, reflecting broader industry uncertainties.
  • Global Defense Spending Risks: Geopolitical tensions and defense budget shifts could impact future growth.
  • High Valuation Multiples: While the current valuation is attractive, it's slightly above the long-term average, potentially limiting short-term upside if it encounters new headwinds.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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