Source: https://www.lockheedmartin.com
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Founded in March 1995 and headquartered in Bethesda, Maryland, Lockheed Martin is the world’s largest defense contractor and half of the company’s annual sales go to the U.S. Department of Defense. They are also a contract for the U.S. Department of Energy and the National Aeronautics and Space Administration (NASA).
Reuters summary of the company is as follows:
Lockheed Martin Corporation is a security and aerospace company. The Company operates through four segments. Aeronautics segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies. Missiles and Fire Control segment provides air and missile defense systems; fire control systems; manned and unmanned ground vehicles, and energy management solutions. Rotary and Mission Systems segment provides design, manufacture, service and support for a range of military and civil helicopters; mission systems and sensors for rotary and fixed-wing aircraft; simulation and training services, and unmanned systems and technologies, among others. Space Systems segment is engaged in the research and development, design, engineering and production of satellites, strategic and defensive missile systems and space transportation systems.
I have a position with Lockheed Martin and prior to investing in Lockheed Martin Corp. (NYSE: LMT) is that I was investing in industrials and space technology but as I began trimming my positions in each sector, I decided that Lockheed Martin is a company I wanted to invest as the company’s core business areas is Aeronautics, Missles and Fire Control, Rotary and Missions Systems (RMS) and Space.
I like how Lockheed Martin develops hypersonic capabilities, working on solutions that combine stealth technology, speed and improved sensors, cyber and intelligence, C41SR solutions, development of aeroshell guards as used in NASA’s latest Mars rover and more.
The company is no doubt a leader when it comes with aircrafts from the F-35, Black Hawk and many more!
The development of technology for our military, our space program, this is something that will continually evolve and not go away anytime.
Source: Schwab.com
As we look at the company’s growth, since the company’s inception, they have continued to grow and from 2013, the company just skyrocketed in terms of pricing from under $100 to eventually going over $350 in 2018.
There has been dips in 2018 where it dropped to $250 and during the pandemic (prior to the pandemic, the company skyrocketed to its highest price of $437.85 in February 2020) where it went under $300 a month later in March 2020 but the company has since rebounded.
As of July 13th, Lockheed Martin Corp. (NYSE: LMT) is priced at $379.93 and has a 52-week range of $319.81 and $402.37, a beta of 0.99 (five year), a market cap of $105.4 billion, an enterprise value of $114.6 billion and shares outstanding of $277.9 million with 73% of the shares held by institutions.
Schwab Equity Ranking has the company’s Marketperform at C (35) which is a Hold. Price Volatility Outlook is Low as of July 9th. The company was graded at Neutral for Growth and Quality, Positive for Stability and Valuation but has a Negative grade on sentiment.
Morningstar Equity Analyst Report has the stock as extremely undervalued with four stars. Morningstar has its fair value estimate at $436.00 (as of April 2021).
Sales in the aeronautic segment was flat and the company delivered fewer F-35’s which makes up about 70% of segment revenue for the company but Morningstar believes the segment has room to grow under the assumptions that the F-35 production returns to peak levels.
And back in April, Burkett Huey, CFA at Morningstar wrote, “We view Lockheed Martin as the highest-quality defense prime contractor, due to its exposure as the prime contractor on the F-35 program and its missile business. The defense budget and the allocation of the budget is a political process, which is inherently difficult to predict. Therefore, we favor companies with tangible growth profiles through a steady stream of contract wins, ideally to contracts that are fulfilled over decades. Thankfully for defense investors, many programs are procured and sustained over decades”.
Reuters has the company as Outperforming, CFRA gave the recommendation of five stars as “STRONG BUY”.
Argus raised their target price to $420 and recommended BUY for 12-month and five year rating.
Argus notes, “Our rating on Focus List selection Lockheed Martin Corp. (NYSE: LMT) is BUY. Lockheed is a leading company in one of the U.S. economy’s core competency industries: Aerospace & Defense. The company has consistently delivered positive surprises to the Street in recent years, regardless of whether defense spending is rising or falling, or the White House is occupied by a Republican or a Democrat. Lately, government spending on certain segments of Defense has picked up – a trend we think is likely to continue.”
As for dividends, the company pays a $2.60 quarterly dividend (annual dividend rate of $10.40) with a 2.74% yield. Earnings per share are $24.97 with price/earnings at $15.18 and forward P/E at $14.21 and Price to Earnings/Growth (PEG).
Since 2013, the company has increased their dividend with no drops whatsoever. So, they have been consistent with dividend payout.
I believe the company will continue to show growth and consistency of dividend payouts looking at past history. With many company charts, you see peaks and dips often, but with Lockheed Martin Corp. (NYSE: LMT), there have been only two significant dips since 2013 and one of those dips was the pandemic, which is understandable.
I also feel that this is a good defensive stock to have in my portfolio.
As always, perform your due diligence and do a lot of research before investing. Talk to a financial advisor and find out if Lockheed Martin Corp. (NYSE: LMT) would be a perfect investment for you.
