Generally speaking, the fluctuation of Lockheed Martin's financial report is not large, and this quarter is the case, with revenue and EPS slightly exceeding expectations. It really has nothing to do with big fluctuations.$Lockheed Martin(LMT)$
Only the last quarter was an exception, and Loma fell 11.8% after the last quarter's financial report. Why Tiger Friends still remember that the accounting treatment of pensions reduced EPS by 4.72 US dollars; More importantly, the current quarter's revenue fell short of expectations and warned of further slowdown in the future.
Interestingly, the gap in last quarter's financial report was just filled before this financial report.
Among the updates we've seen throughout the season is a slight drop in sales in 2022 for the company's divisions other than aviation, in line with forecasts in October, reflecting the end of the UK's nuclear weapons programme and resistance to traditional projects, notably Black Hawk helicopters. However, the operating profit margin may remain at 11% in 2022. With the increase of CH-53K helicopter production, the rotation and mission system department faces some unfavorable factors, which leads to a decline in profit margin.
The company aims to get at least $6 billion in free cash flow every year between 2022-23, supporting its more aggressive stock repurchase program. If the acquisition of Aerojet fails, the buyback may be further expanded, given the FTC's blocking. However, companies with money can still acquire.
As far as Loma is concerned, we know that the key to the company's revenue lies in the defense budget expenditure of the US government.
The US defence budget, which stood at $331 billion in 2001, has grown to nearly $732 billion. It will grow even more in the coming decades, which is a basic logic of Loma investment.
Looking back at the past ten years, from 2012 to 2016, Lockheed Martin's revenue growth was zero. Between 2012 and 2014, annual sales fell from $47.2 billion to about $40 billion. It took the company more than two years to recover from the recession. The reason is very simple. The US defense budget has declined in recent years. Considering the situation in Ukraine in the past two days, it is really good for American military industry.
In addition, when it comes to Loma, we should know that its strong style as a company is dividend + repurchase.
Last quarter, the company's board of directors increased the remaining share repurchase authorization by $5 billion, bringing the total to $6 billion. They said the plan would spend $6bn on buybacks over the next 12-18 months, which is good news for shareholders. Very impressive.
At present, the valuation of Loma can be said to be at a low level, lower than the historical average. For investors who are bullish, it is another good thing.
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