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Lockheed Martin's 1st-Quarter Results Soar Above Expectations

Shares of aerospace and defense giant Lockheed Martin Corp. (NYSE:LMT) rose 1% in premarket trading on Tuesday after it reported strong first-quarter results.

The Bethesda, Maryland-based company, which builds a wide variety of aircraft, aerospace and defense systems, posted earnings of $6.08 per share, topping Refinitiv's estimates of $5.80. Revenue grew 9.2% from the prior-year quarter to $15.65 billion, beating expectations of $15.08 billion.


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The company's results were driven by higher sales in the aeronautics business, where it saw a 14% increase to $6.36 billion on the back of increased volume in production, sustainment and development of its F-35 fighter jet program.

Lockheed also recorded 11% sales growth in its missiles and fire control business to $2.6 billion and a 10% increase in its space division to $2.9 billion, while revenue in the rotary and mission systems segment was flat from a year ago at $3.7 billion.

Looking ahead, the company also revised its outlook for fiscal 2020. While the full impact the Covid-19 virus will have is unknown, Lockheed Martin lowered its sales guidance due to disruptions to production and supply chain activities that were caused by the pandemic. It now expects revenue to range from $62.25 billion to $64 billion, which is down from the previous forecast of $62.75 billion to $64.25 billion. Earnings per share are still anticipated to be between $23.65 and $23.95 for the year.

Overall, CNBC reported that analysts do not expect the U.S. defense sector to experience much disruption from the pandemic since companies in this space have more stable cash flows compared to industrial markets.

In a statement, Lockheed Martin Chairman, President and CEO Marillyn Hewson commented on the strategy it is using to combat the potential impacts of the coronavirus.

"As we confront the challenges introduced by the global pandemic, our corporation remains focused on providing vital national security solutions for our customers while maintaining a safe and healthy environment for our employees," she said. "I'm so proud of the work the dedicated men and women of Lockheed Martin are doing as part of our strong portfolio to deliver critical products and services for our customers and long-term value for our shareholders."

Following its inital pop, the stock headed lower after the market opened. With a $108.34 billion market cap, shares of Lockheed Martin were trading around $380.54 on Tuesday. GuruFocus estimates the stock has declined around 2% year to date.

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According to the Industry Overview page, Lockheed Martin is the largest player in the aerospace and defense sector at 20.2%, followed by Raytheon Technologies Corp. (NYSE:RTX), Boeing Co. (NYSE:BA), Northrop Grumman Corp. (NYSE:NOC) and L3Harris Technologies Inc. (NYSE:LHX).

Gurus who are currently invested in the stock include Jim Simons (Trades, Portfolio)' Renaissance Technologies, Joel Greenblatt (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), John Rogers (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Ronald Muhlenkamp (Trades, Portfolio), among others.

Disclosure: No positions.

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This article first appeared on GuruFocus.