Lockheed Martin Corp. (LMT): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


We are downgrading our recommendation on Lockheed Martin Corp. to Neutral from Outperform. In the third quarter, revenues missed the Zacks Consensus Estimate and declined year over year. Lockheed Martin expects 2015 revenues to decline in the low single digits, and also expects lower cash from operations for the year compared with its previous forecast. Yet, the company's better-than-expected third-quarter earnings were commendable considering the severe pressure on the U.S. military budget. The raised full-year guidance is all the more encouraging. Lockheed Martin also got a boost from its recent decision to freeze its defined benefit pension plan, which will aid earnings over the long term. The healthy dividend yield and stable cash flow will likely keep the stock defensive in spite of budget uncertainties.


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 Space Systems.

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 Aeronautics Programs.

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 commercial orders.

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 Systems.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: MFC , LMT



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