Lockheed Martin Corp. reported higher-than-expected fourth quarter
earnings on improved top-line growth, buoyed by F-35 fighter jet
demand. Despite a tepid defense budget, the company's top line
increased 8.6% from $11.5 billion a year ago. However, the defense
contractor issued a weaker-than-expected 2015 profit forecast. The
company expects 2015 revenues to decline 4.6% year on year, a sharp
drop from the low single-digit decline forecasted in Oct 2014. The
threat of sequestration is negatively impacting the company's
backlog. LMT ended 2014 with $80.5 billion of backlog, down 2.5%
year over year. We expect the stock to trade in line with the
broader market indices and, therefore, are maintaining our Neutral
Lockheed Martin Corporation is the largest defense contractor in
the world. The company's customer base includes the U.S.
government, foreign governments, and other commercial buyers.
The company operates through the following five businesses:
Aeronautics, Information Systems & Global Solutions, Missiles
and Fire Control (MFC), Mission Systems and Training (MST), and
Aeronautics is engaged in the design, research and development,
systems integration, production and support of advanced military
aircraft and related technologies. The segment operates in three
lines of business: Combat Aircraft, Air Mobility and Other
This segment is busy with major programs comprising F-35
Lightning II Joint Strike Fighter C-130 Hercules F-16 Fighting
Falcon F-22 Raptor and C-5M Super Galaxy.
Information Systems & Global Services provides management,
engineering and logistical services, and offers solutions for the
command, control, communications, computers, intelligence,
reconnaissance, and surveillance (C4ISR) activities of the U.S.
Department of Defense (DoD), intelligence agencies, other federal
agencies and allied countries. IS&GS has three principal lines
of business: Civil, Defense and Intelligence.
In the MFC business, headquartered in Dallas, some of its
high-profile programs include the Terminal High Altitude Area
Defense System, Joint Light Tactical Vehicle, PAC-3 Missiles, as
well as logistics and other technical services from GTL.
In the MST business, headquartered in Washington, DC, some of
its high-profile programs include the Aegis Combat System, Littoral
Combat Ship, MH-60 helicopter avionics, as well as military and
Space Systems is engaged in the design, development,
engineering, and production of commercial and military space
systems. Space Systems has three lines of business: Satellites,
Strategic & Defensive Missile Systems, and Space Transportation
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