On Mar 26, we upgraded aerospace and defense major
Lockheed Martin Corporation
) to a Zacks Rank #1 (Strong Buy).
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LOCKHEED MARTIN (LMT): Free Stock Analysis
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Why the Upgrade?
Lockheed reported mixed results in the fourth quarter 2012 with
earnings below and revenue above the Zacks Consensus Estimates.
But that did not deter us from holding a bullish outlook on the
company. Our favorable outlook stems from a solid order backlog,
incremental dividend payouts and positive initiatives taken by
Lockheed Martin is a well-managed defense prime. Its working
capital improvements continue to impress, as is evident from its
inventory turnover of 16.1 times in the trailing twelve months at
the end of 2012, compared to only 3.1 times for the Zacks
industry average -- a strong sign of operational
efficiency. In addition, Lockheed's operational
effectiveness is evident in its industry-high Return on
Investment (ROI) of 34.9% in 2012.
Lockheed Martin has one of the strongest balance sheets among its
peers, with a stable long-term debt-to-capitalization of 80.2% at
the end of 2012. Lockheed continues to be a strong cash generator
with its operating cash flow reaching approximately $1.6 billion
Lockheed's premier position in the defense space is upheld by the
company's solid 2013 guidance. Lockheed Martin forecast full-year
2013 earnings per share in the range of $8.80-$9.10 on net
revenues of $44.5-$46.0 billion.
Over the long term, the earnings growth rate is pegged at 6.08%
while the top line is expected to rise at a clip of 2.66%. The
last 90 days saw the Zacks Consensus Estimates for 2013 and 2014
rise a respective 7.6% and 2.9% to $8.87 and $9.11.
Other Stocks to Consider
Besides Lockheed Martin, other defense stocks that are currently
performing well include
The Boeing Company
Alliant Techsystems Inc.
). These companies carry a Zacks Rank #2 (Buy). We also have
), which currently sports a Zacks Rank #1 (Strong Buy).