Lockheed Martin (NYSE:LMT) posted a profit but missed revenue due to F-35 delivery delays, and lowered full-year expectations. Investors were blown away by the news, sending Lockheed shares down 5% as of 10:30 a.m. ET.
A solid quarter below the surface
Lockheed Martin, the world’s largest defense contractor, earned $6.80 per share on revenue of $17.1 billion in the third quarter. That’s a mixed result compared to Wall Street’s $6.50 per share on $17.4 billion in revenue, according to the consensus estimate.
Delays in delivery of the F-35 aircraft resulted in a $400 million sales headwind in the quarter, but the company expects to make up at least some of that miss in coming quarters. The company raised its full-year 2024 earnings guidance to $26.60 per share from $26.10. It now expects annual revenue of $71.25 billion, lowering its previous projection of $70.5 billion to $71.5 billion.
“Following our strong performance since the beginning of the year and confidence in our near-term performance, we are raising the full-year 2024 revenue outlook, segment operating profit, [earnings per share]and free cash flow,” CEO Jim Taiclet said in a statement.
Is Lockheed Martin a buy?
Wall Street appears to be focused on the quarter’s lackluster 1% annualized revenue growth, but for long-term-oriented investors there were no signs of danger this quarter.
Lockheed Martin’s operating margin of 12.5% was about 60 basis points above expectations, and free cash flow of $2.1 billion was well above Wall Street’s $1.3 billion forecast. Strong space and rocket bookings also allowed Lockheed Martin to achieve a book-to-bill ratio of 1.43 this quarter, providing a good foundation for future periods.
The company also increased its dividend by 5% and authorized $3 billion in additional share buybacks.
Lockheed Martin plays a leading role in some of the nation’s top defense priorities, and a $165 billion backlog of future activities provides a degree of predictability. For investors looking for a solid income investment with some growth upside, Lockheed remains a solid defensive choice.
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Lou Whiteman has positions at Lockheed Martin. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.
Why Lockheed Martin Stock Is Losing Ground Today was originally published by The Motley Fool
