On Jun 17, 2013, the shares of Lockheed Martin Corp. (
) hit a 52-week high of $109.25. The adjusted closing price was
$108.27 per share, a 2.7% jump from the beginning of the month.
The company has been performing well, registering positive
earnings surprises in three of the last four quarters, with an
average beat of 16.56%.
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It is not only about posting earnings surprises but the work that
goes on in the background, which ensures a steady performance
from the company quarter after quarter. One of the basic
parameters is innovation, which allows Lockheed to stay ahead in
the race. For example, the Orion multi-purpose crew vehicle from
LMT is a potential game changer in U.S. space exploration.
A slew of foreign military sales contracts along with training
programs ensure a steady stream of revenues for the company.
Early in June Lockheed received contracts from Canada, Saudi
Arbia and Finland.
Apart from defense, Lockheed's expertise extends to other fields.
Recently, Lockheed agreed to assist the Chinese authority in
manufacturing Generation III nuclear power plant reactors. The
company will also ensure operational safety at the nuclear power
So, the threat of sequestration notwithstanding, the diverse
product offerings, strong program execution and cost reduction
measures will help the company to sustain its profitability. This
defense behemoth exited the quarter with a total backlog of $77.9
The strong financial performance of the company allows it to
reward its shareholders through share buybacks and payment of
The present valuation reflects that the company's shares are
trading at a discount to its peers. The shares of Lockheed Martin
currently trade at 12.05x 12-month forward earnings, a 16.4%
discount to the peer group average of 14.41x. Its price-to-sales
ratio of 0.74 is at a 10.84% discount to the peer group average
Lockheed currently retains a Zacks Rank #3 (Hold). Other
companies in the industry worth considering are
Erickson Air-Crane Inc.
Alliant Techsystems Inc.
Wesco Aircraft Holdings Inc.
). Erickson Air-Crane presently has a Zacks Rank #1 (Strong Buy)
while Alliant Techsystems and Wesco Aircraft Holdings hold a
Zacks Rank # 2 (Buy).