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Will F-35 Program Boost Lockheed Martin's (LMT) Q2 Earnings?

Zacks Equity Research

Lockheed Martin Corp.’s LMT Aeronautics segment is expected to witness solid revenue growth in second-quarter 2019 backed by higher volume of F-35 deliveries. This defense major is slated to release quarterly results on Jul 23, before market open.

Solid Delivery Expectations

Lockheed Martin’s F-35 program continues to be a primary growth driver for the company, with 370 production aircraft in backlog as of Mar 31, 2019. During the first quarter, the company delivered 26 F-35 aircraft, reflecting 85.7% improvement year over year.

Considering the U.S. government's current inventory target of 2,456 aircraft for the Air Force, Marine Corps and Navy, the company has been consistently increasing the production of F-35 jets. Therefore, we may expect second-quarter results to reflect similar solid deliver figures, which in turn might boost the Aeronautics segment’s top line.

Notably, the company’s Aeronautics unit witnessed 27% annual top-line growth in the first quarter, with the F-35 program being a prime contributor. Anticipating similar trend to follow this time as well, the Zacks Consensus Estimate for this unit’s second-quarter revenues is pegged at $5,699 million, implying a 7.1% improvement from the year-ago quarter’s reported figure.

Higher volume of F-35 deliveries also tends to boost the Aeronautics segment’s operating profit. In line with this, the consensus estimate for this unit’s second-quarter operating profit stands at $610 million, suggesting a 6.6% improvement from the prior-year quarter’s reported number.

Lockheed Martin Corporation Price and EPS Surprise

Lockheed Martin Corporation Price and EPS Surprise

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

What the Zacks Model Unveils

Our proven model shows that Lockheed Martin is likely to beat on earnings in second-quarter 2019. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. 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 +0.14% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks That Warrant a Look

Here are some companies in the Aerospace sector that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

The Boeing Company BA is scheduled to report second-quarter 2019 results on Jul 24. The company has an Earnings ESP of +2.72% and a Zacks Rank #3.

Moog Inc. MOG.A is expected to report third-quarter fiscal 2019 results on Jul 26. The company has an Earnings ESP of +0.76% and a Zacks Rank #3.

Ducommun Incorporated DCO is expected to report second-quarter 2019 results on Aug 5. The company has an Earnings ESP of +12.75% and a Zacks Rank #3.

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