Why Lockheed Martin Earnings Sent Investors Fleeing
Lockheed Martin's better-than-expected earnings and sales along with raised guidance for the fiscal year were not enough to quell investors' fears of bad news ahead.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Lockheed Martin Corp. (NYSE: LMT | LMT Price Prediction) reported second-quarter 2019 results before markets opened Tuesday morning. The world’s largest defense company posted diluted earnings per share (EPS) from continuing operations of $5.00 on revenues of $14.43 billion. In the same period a year ago, the company reported EPS of $4.05 on revenues of $13.4 billion. Second-quarter results also compare to the consensus estimates for EPS of $4.77 and $14.2 billion in revenues.
Cash flow from operations totaled $1.7 billion in the most recent quarter, up from a cash flow deficit of $72 million in the year-ago quarter following pension contributions of $2 billion.
Lockheed raised revenue guidance for the full fiscal year from a prior range of $56.75 billion to $58.25 billion to a new one of $58.25 billion to $59.75 billion. The EPS estimate was also raised, from $20.05 to $20.35 to a new range of $20.85 to $21.15. Operating profit also was boosted from $6.10 billion to $6.25 billion to a new range of $6.33 billion to $6.48 billion.
[nativounit]
CEO Marillyn Hewitt commented:
The corporation achieved another quarter of strong operational and financial results across all four of our businesses, which allowed us to grow our backlog to a new record level and to increase our financial outlook for 2019. Our team remains focused on driving growth, investing in innovative solutions, and creating long-term value for shareholders.
The company repurchased 600,000 shares of its stock valued at $219 million during the second quarter and paid dividends totaling $622 million.
All four of the company segments posted a year-over-year gain in sales and operating profit. Sales rose by more than $200 million in each segment, while profit was up by $6 million in the rotary and mission systems units and $48 million in missiles and fire control units.
Analysts expect Lockheed to post third-quarter sales of $14.43 billion and EPS of $4.84. Full-year EPS is forecast at $20.57 on sales of $58.06 billion.
Investors cheered the raised guidance and the better-than-expected top-line and bottom-line results by snipping about 0.5% from the share price. The company did note that the impact of U.S. actions canceling sales of Lockheed’s F-35 joint strike fighter is not included in the raised guidance. That’s probably the reason for the tepid response to otherwise solid results.
Shares traded down about 0.7% in the late morning Tuesday, at $355.33 in a 52-week range of $241.18 to $373.37. The consensus 12-month price target on the stock was $382.39 before results were announced.
[recirclink id=561778]
[wallst_email_signup]
Contact [email protected] for any questions or corrections.
Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
