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Lockheed Martin (LMT) Q4 Earnings In Line, Sales Top Estimates

Zacks Equity Research

Lockheed Martin Corp. LMT reported fourth-quarter 2018 earnings of $4.39 per share, which came in line with the Zacks Consensus Estimate. The company incurred loss of $2.85 in the year-ago quarter.

For 2018, Lockheed Martin’s adjusted earnings came in at $17.59 per share, which surpassed the Zacks Consensus Estimate of $17.58 by a penny.

Operational Highlights

In the reported quarter, net sales amounted to $14.41 billion, which outshined the Zacks Consensus Estimate of $13.82 billion by 4.3%. Moreover, the company's sales increased 4.1% from $13.84 billion a year ago. Notably, all segments registered year-over-year growth in sales, except Rotary and Mission Systems.

For 2018, Lockheed Martin generated sales of $53.76 billion, which exceeded the Zacks Consensus Estimate of $53.03 billion by 1.4%.

Lockheed Martin Corporation Price, Consensus and EPS Surprise

Lockheed Martin Corporation Price, Consensus and EPS Surprise | Lockheed Martin Corporation Quote

Backlog

Lockheed Martin ended 2018 (on Dec 31, 2018) with $130.5 billion in backlog, up 23.7% from $105.5 billion at the end of 2017. Of this, the Aeronautics segment accounted for $55.60 billion, while Rotary and Mission Systems contributed $31.32 billion. Also, $22.18 billion came from Space Systems and $21.36 billion from the Missiles and Fire Control segment.

Segmental Performance

Aeronautics: Sales increased 4% year over year to $5.88 billion, primarily driven by higher net sales from the F-35, F-16 and F-16 programs.

Operating profit declined 5% year over year to $626 million, while operating margin contracted 100 basis points (bps) to 10.6%.

Missiles and Fire Control: Quarterly sales rose 22% year over year to $2.43 billion owing to higher sales for tactical and strike missiles programs as well as integrated air and missile defense programs.

While operating profit increased 51% year over year to $376 million, operating margin expanded 300 bps to 15.5%.

Rotary and Mission Systems: Quarterly sales of $3.61 billion decreased 4% from the prior-year quarter on account of lower sales from Sikorsky helicopter program. Also, lower sales volume from the C6ISR (command, control, communications, computers, cyber, combat systems, intelligence, surveillance, and reconnaissance) program hurt the segment’s top line.

Operating profit improved 17% year over year to $289 million, while operating margin expanded 150 bps to 9.4%.

Space Systems: Sales rose 2% year over year to about $2.49 billion in the fourth quarter. The uptick was driven by higher net sales for government satellite, strategic and missile defense programs as well as the Orion program.

Operating profit increased 4% to $224 million, while operating margin expanded 20 bps to 9% in the reported quarter.

Financial Condition

Lockheed Martin’s cash and cash equivalents totaled $0.77 billion as of Dec 31, 2018 compared with $2.86 billion at the end of 2017. Long-term debt summed $12.60 billion, lower than the prior year-end level of $13.51 billion.

Cash from operations at the end of 2018 amounted to $3.14 billion compared with the year-ago level of $6.48 billion.

During 2018, the company repurchased 4.7 million shares for $1.5 billion compared with the buyback of 7.1 million shares for $2 billion a year ago.

The company paid dividends worth $2.3 billion to its shareholders in 2018 compared with the year-ago figure of $2.2 billion.

Guidance

For 2019, Lockheed Martin issued its financial guidance. The company expects to generate revenues of $55.75-$57.25 billion. On the bottom-line front, it expects to deliver earnings per share in the $19.15-$19.45 band.

The company expects to generate cash from operations of more than $7.4 billion, next year.

Zacks Rank

Lockheed Martin currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Teledyne Technologies TDY reported adjusted fourth-quarter 2018 earnings of $2.33 per share, which surpassed the Zacks Consensus Estimate of $2.19 by 6.4%. The bottom line also improved 27.3% from the year-ago quarter’s figure of $1.83.

Textron TXT reported fourth-quarter 2018 adjusted earnings from continuing operations of $1.15 per share, which surpassed the Zacks Consensus Estimate of 98 cents by 17.3%. The bottom line also surged 55.4% from 74 cents registered in the year-ago quarter.

Hexcel Corporation HXL reported fourth-quarter 2018 adjusted earnings of 82 cents per share, exceeding the Zacks Consensus Estimate of 80 cents by 2.5%. Further, the bottom line improved 17.1% from the prior-year figure of 70 cents.

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