Lockheed Martin Corporation (LMT) stands out as a promising investment opportunity within the Zacks Aerospace sector. The company boasts a strong foundation built on a robust backlog, rising earnings and sales estimates, a healthy return on equity (ROE), and high solvency. These factors, combined with LMT’s current Zacks Rank #2 (Buy), make it an attractive prospect for investors seeking exposure to the aerospace industry. Let’s delve into the key drivers behind LMT’s compelling growth potential.
LMT’s Growth Projections and Surprise History
The Zacks Consensus Estimate for LMT’s 2025 earnings per share is projected at $28.87, representing an impressive year-over-year growth of 8.9%. Similarly, the consensus estimate for 2024 sales is set at $71.14 billion, indicating a solid 5.3% year-over-year increase. LMT’s long-term (three to five years) earnings growth rate is forecast at 4.7%, signifying a consistent trajectory of profitability. Furthermore, LMT has a history of exceeding earnings expectations. Its trailing four-quarter earnings surprise averages 7.46%, demonstrating its ability to consistently deliver stronger-than-anticipated results.
LMT’s Dividend Yield and Share Repurchases
Lockheed Martin is committed to rewarding its shareholders through consistent dividend payments. The company’s current dividend yield sits at 2.08%, surpassing the industry average of 1.54%. This signifies a compelling return for investors. In the first six months of 2024, LMT repurchased 4.2 million shares valued at $1.9 billion. As of June 30, 2024, the company’s remaining authorization for common share repurchases under its program stood at $8.2 billion. These actions demonstrate LMT’s confidence in its future prospects and its dedication to shareholder value.
LMT’s Return on Equity (ROE)
LMT’s current ROE stands at an impressive 95.03%, significantly exceeding the industry average of 11.55%. ROE is a crucial profitability metric that reflects the effectiveness with which a company utilizes its shareholders’ funds to generate income. LMT’s exceptional ROE highlights its efficient operations and its ability to translate shareholder investments into significant returns.
LMT’s Solvency
At the end of the second quarter, LMT’s time-to-interest earned ratio was 8.83. This ratio, being greater than one, indicates LMT’s strong ability to meet its future interest obligations without facing difficulties. It reflects the company’s financial stability and its capacity to manage its debt effectively.
LMT’s Liquidity
LMT’s current ratio, a measure of its short-term liquidity, stands at 1.24, exceeding the industry average of 1.10. This indicates that LMT possesses sufficient short-term assets to meet its short-term obligations, reinforcing its financial flexibility.
LMT’s Rising Backlog
Lockheed Martin’s total backlog reached a solid $158.34 billion as of June 30, 2024. This consistent level of contract flows and subsequent backlog growth strongly support LMT’s long-term revenue prospects. The company anticipates recognizing approximately 36% of its backlog over the next 12 months and approximately 60% over the next 24 months. This robust backlog provides a clear roadmap for sustained revenue generation and growth in the coming years.
LMT’s Stock Price Performance
LMT’s stock price has exhibited impressive growth, surging 31.8% in the past three months, outperforming the industry’s 9.9% growth. This performance reflects the market’s confidence in LMT’s strong fundamentals and its ability to capitalize on industry trends.
Other Stocks to Consider
For investors seeking additional opportunities in the aerospace sector, several other top-ranked stocks warrant attention:
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Air Industries Group (AIRI):
With a Zacks Rank #1 (Strong Buy), AIRI has delivered an average earnings surprise of 8.88% in the last four quarters. The Zacks Consensus Estimate for AIRI’s 2024 sales indicates year-over-year growth of 7.1%.*
Leidos Holdings, Inc. (LDOS):
Holding a Zacks Rank #2, LDOS has a track record of exceeding earnings expectations, boasting an average earnings surprise of 23.49% in the last four quarters. The consensus estimate for LDOS’s 2024 sales points to a 5.4% year-over-year increase.*
RTX Corporation (RTX):
Also with a Zacks Rank #2, RTX has consistently delivered positive earnings surprises, averaging 6.62% in the last four quarters. The Zacks Consensus Estimate for RTX’s 2024 sales anticipates a 7% year-over-year growth.In conclusion, Lockheed Martin’s strong backlog, rising earnings and sales estimates, robust ROE, and high solvency make it a compelling investment opportunity in the Aerospace sector. The company’s positive earnings surprise history, generous dividend yield, and share repurchase program further solidify its attractiveness. Investors seeking exposure to this dynamic industry would be well-advised to consider LMT as a core holding in their portfolio.
