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Should You Buy, Hold or Sell Lockheed Martin Stock Post Q4 Earnings?
Lockheed Martin Corp. LMT delivered mixed fourth-quarter 2024 results. While its bottom line comfortably surpassed the Zacks Consensus Estimate, its top line missed the same. Unimpressively, on a year-over-year basis, both LMT’s sales and earnings reflected deterioration.
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While dismal sales performance at two of its four business segments led to the reported quarter’s sales decline, higher cost of sales and interest expense affected the bottom line. As a silver lining, the company ended 2024 with cash and cash equivalents worth $2.48 billion compared with $1.44 billion at the end of 2023. Such an improved cash balance indicates a healthy financial position for LMT .
A prudent investor knows that a significant decision like buying a stock should not depend on a company’s single quarterly performance alone. Instead, to make a more informed decision, one should be mindful of the stock’s performance over the past year in terms of share price return, its long-term prospects as well as risks (if any) to investing in the same. We have provided a detailed discussion on this, as one can see below.
Shares of Lockheed have surged 6% over the past year, outperforming the Zacks aerospace-defense industry’s growth of 0.7%. However, the stock has underperformed the broader Zacks Aerospace sector’s growth of 8.7% as well as the S&P 500’s gain of 23% in the same time frame.
A stellar performance has been delivered by other industry players like Embraer ERJ, RTX Corp. RTX and Leidos Holdings LDOS, which outpaced the industry, sector as well as the S&P 500. Notably, shares of these defense stocks witnessed a surge of 118.7%, 41.7% and 26.8%, respectively, over the past year.
LMT’s One-Year Performance
Image Source: Zacks Investment Research
Lockheed’s broad portfolio of varied products — ranging from stealth fighter aircraft and littoral combat ships to missiles and space exploration capabilities — allows it to secure major defense contracts, boosting its backlog count. Evidently, the company ended 2024 with a record backlog of $176 billion, reflecting a solid increase from the previous year’s level of $160.6 billion. Such improving backlog count reflects the strong demand that LMT’s advanced defense technology and systems enjoy worldwide. This got reflected in the form of solid share price hike over the past year.
Moreover, LMT’s solid financial position enables it to make notable payouts to its shareholders. In 2024, Lockheed paid out dividends worth $3.06 billion to its shareholders and repurchased 7.5 million shares worth $3.7 billion. Investors tend to choose stocks like LMT that offer solid shareholder returns in the form of healthy dividend payouts and share repurchases.
Lockheed Martin Corporation recently reported its fourth quarter earnings, leaving investors wondering whether they should buy, hold, or sell the stock. With the company beating earnings estimates and providing strong guidance for the future, many may see this as a buying opportunity.
Lockheed Martin is a leading defense contractor with a strong track record of delivering solid financial results. The company reported fourth quarter earnings per share of $6.38, beating analyst estimates of $6.34. Revenue also exceeded expectations, coming in at $17.02 billion compared to the forecasted $16.86 billion.
Looking ahead, Lockheed Martin provided strong guidance for 2022, forecasting earnings per share in the range of $27.40 to $27.70. This guidance reflects the company’s confidence in its ability to continue generating strong profits in the coming year.
Given the positive earnings report and strong guidance, many analysts are recommending buying Lockheed Martin stock. The company’s solid financials, strong position in the defense industry, and consistent dividend payments make it an attractive investment opportunity for long-term investors.
However, it is important to consider potential risks before making any investment decisions. Factors such as geopolitical tensions, changes in government spending on defense, and competition from other defense contractors could impact Lockheed Martin’s future performance.
Ultimately, whether you should buy, hold, or sell Lockheed Martin stock post-Q4 earnings will depend on your individual investment goals and risk tolerance. It is always advisable to do thorough research and consult with a financial advisor before making any decisions.
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