On May 22, 2013, the shares of
Lockheed Martin Corporation
) hit a 52-week high of $107.93. Lockheed Martin registered
positive earnings surprises in three of the last four quarters,
with an average beat of 16.56%. Another defense operator
L-3 Communications Holdings Inc.
) touched its 52-week high of $87.96 on the same day.
The first quarter 2013 results of Lockheed Martin were higher
than our expectation. The outperformance was attributed to
better-than-expected sales volume and strong segment operating
profit and cash from operations.
Despite the threat of sequestration in the defense budget, the
variety of product offerings, strong program execution and cost
reduction measures will help the company to sustain its
profitability. This defense contractor continues to receive
orders from its global customer base and exited the quarter with
a total backlog of $77.9 billion.
In addition, Lockheed Martin's consistent investment in research
and development work to improve and introduce products that can
address global security needs, will help it to stay ahead of its
We expect long-term earnings growth of 6.82% on the back of sales
growth of 2.5%. The Zacks Consensus Estimate for 2013 is $8.99,
reflecting year-over-year growth of 6.36%.
Lockheed Martin has been consistently increasing the value of its
shareholders. In the first quarter, the company repurchased 5
million shares for nearly $460 million and paid dividend worth
The present valuation reflects that the company's shares are
trading at a discount compared to its peers. The shares of
Lockheed Martin currently trade at 11.85x 12-month forward
earnings, a 14.5% discount to the peer group average of 13.86x.
Its price-to-book ratio of 0.73 is at a 10.97% discount to the
peer group average of 0.82.
Lockheed currently retains a Zacks Rank #3 (Hold). Other
companies in the industry which are worth considering are
Erickson Air-Crane Incorporated
Wesco Aircraft Holdings Inc.
). The former presently has a Zacks Rank # 1 (Strong Buy) while
the latter has a Zacks Rank # 2 (Buy).
Based in Bethesda, Maryland, Lockheed Martin is a global security
company that is principally engaged in the research, design,
development, manufacture, integration and sustainment of advanced
technology systems, products and services.
ERICKSON AIR-CR (EAC): Free Stock Analysis
L-3 COMM HLDGS (LLL): Free Stock Analysis
LOCKHEED MARTIN (LMT): Free Stock Analysis
WESCO AIRCRAFT (WAIR): Free Stock Analysis
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