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Will Product Deliveries Aid Lockheed's (LMT) Q2 Earnings?

Lockheed Martin Corporation LMT is slated to release second-quarter 2020 results on Jul 21, before the opening bell.

The company’s largest segment, Aeronautics is expected to have generated solid growth in the soon-to-be-reported quarter. Consistent growth in other segments is also expected to have boosted its overall results.

Let's see how things have shaped up prior to this announcement.

Aeronautics Unit: A Key Catalyst

Lockheed Martin’s Aeronautics segment has been a major growth catalyst for this defense contractor for decades. It primarily manufactures advanced, combat-proven jets and comprises almost 40% of the company’s top line. With Lockheed Martin having delivered a notable number of military jets in the second quarter, its soon-to-reported quarter’s results should reflect impressive Aeronautics business division numbers.

Notably, during the quarter, the company delivered the U.S. Air Force Reserve’s first HC-130J Combat King II to a crew from the 920th Rescue Wing (RQW) of Patrick Air Force Base, FL. The company also delivered the first KC-130J Super Hercules tanker assigned to Marine Aerial Refueler Transport Squadron 452 (VMGR-452), the Marine Forces Reserve squadron at Stewart Air National Guard Base, NY.

Lockheed Martin Corporation Price and EPS Surprise

Lockheed Martin Corporation Price and EPS Surprise

Lockheed Martin Corporation price-eps-surprise | Lockheed Martin Corporation Quote

The upcoming results are expected to reflect such deliveries in the form of increased top line for the Aeronautics unit.The company is likely to have ramped up production of F-35 jets as it progressed with the joint plan of the U.S. government and industry for delivery of more than 3,300 aircraft.

However, in the wake of the coronavirus pandemic, supply chain disruption and slowed production rate for the majority of Aeronautics units’ products might have dampened this unit’s second-quarter performance to some extent.

Notably, the Zacks Consensus Estimate for this unit’s revenues stands at $5,792 million, indicating 4% improvement from the prior-year quarter’s reported figure.

The MFC Unit: Another Growth Driver

We expect Lockheed Martin’s Missiles and Fire Control (MFC) segment, which provides critical missile defense support to the United States and its foreign allies, to have delivered a strong operational performance in the soon-to-be-reported quarter. Notably, consistent deliveries of critical and tactical strike weapons must have contributed to this unit’s growth in the second quarter of 2020. In particular, during the quarter, Lockheed’s joint venture with Northrop Grumman NOC, Longbow limited delivered the 500th APG-78 LONGBOW Fire Control Radar (FCR) for Boeing’s BA AH-64 Apache helicopter. The company also delivered the first Q-53 system to the U.S. Army equipped with GaN

The Zacks Consensus Estimate for MFC segment revenues is currently pegged at $2,622 million, implying an8.8% increase from the year-ago quarter’s reported figure.

Earnings and Revenue Estimates

Solid revenue growth in each of the company’s business segments is likely to have boosted Lockheed Martin’s overall top line in the to-be-reported quarter. The Zacks Consensus Estimate for thecompany’s second-quarter revenues stands at $15.24 billion, indicating a solid 5.6% increase from the year-earlier quarter’s reported figure.

The estimated top-line growth along with its resilient portfolio makes us confident about its ability to generate solid bottom-line growth.

The Zacks Consensus Estimate for the defense giant’s second-quarter earnings is pegged at $5.71 per share, indicating an increase of 14.2% from the prior-year quarter's reported number.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Lockheed Martin this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat and this is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Lockheed Martin has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stock to Consider

Leidos Holdings LDOS is a defense major you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this season:

Leidos has an Earnings ESP of +0.11% and a Zacks Rank #3.

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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 Nasdaq, Inc.

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