Earnings Previews: Lockheed Martin, NextEra Energy, Raytheon, Verizon

U.S. markets got off to a rocky start Friday morning. Netflix reported results Thursday afternoon that disappointed investors, primarily because of its uncertain guidance. Both railroad operator CSX and chemicals maker PPG Industries beat earnings and revenue estimates, but both traded down in Friday’s premarket.

Earlier Friday morning, financial services firms Ally and Huntington Bancshares, as well as Schlumberger, also beat on both the top and bottom lines but traded lower in Friday’s premarket session.

We already have previewed three companies set to report earnings on Monday (Halliburton, IBM and Steel Dynamics) and four that will report earnings before markets open on Tuesday (American Express, General Electric, Johnson & Johnson and 3M).

Here is a look at four more firms scheduled to report results first thing Tuesday morning. Yes, it will be a busy day.

Lockheed Martin

Lockheed Martin Corp. (NYSE: LMT) led all U.S. federal contractors in federally obligated payments in 2020, accumulating some $76.8 billion. Of that total, $75.2 billion were awarded to the company’s defense businesses. Lockheed received 13.5% of all federal contract dollars in 2020 and 20.5% of defense dollars.

Over the past 12 months, the company’s stock has added nearly 12%. The Federal Trade Commission earlier this month delayed a decision on the company’s proposed $4.4 billion merger with Aerojet Rocketdyne. The deal received backing from a bipartisan group of U.S. lawmakers in September.

Analysts’ enthusiasm for the stock has diminished since the company reported third-quarter results in October. Now just five of 17 brokerages have a Buy or Strong Buy rating on the stock, compared to nine of 19 in October. Twelve brokerages currently rate the stock at Hold. At a recent price of around $373.60 a share, the upside potential based on a median price target of $387 is 3.6%. At the high price target of $450, the upside potential is 20.4%.

Fourth-quarter revenue is forecast at $17.66 billion, would be up 10.2% sequentially and about 3.7% higher year over year. Adjusted earnings per share (EPS) are expected to come in at $7.14, up about 3% sequentially and up nearly 12% year over year. For full fiscal 2021, Lockheed is expected to post EPS of $26.67, up 8.9%, on sales of $67.02 billion, up 2.5%.

Lockheed stock trades at 14.0 times expected 2021 EPS, 14.0 times estimated 2022 earnings of $26.67 and 13.4 times estimated 2023 earnings of $27.91 per share. The stock’s 52-week range is $319.81 to $396.99, and Lockheed pays an annual dividend of $11.20 (yield of 2.97%). Total shareholder return over the past 12 months was 13.6%.

NextEra Energy

In calendar year 2021, electricity generator NextEra Energy Inc. (NYSE: NEE) posted a share price gain of 23.4%. Since the beginning of this year, the share price has dropped by about 12%. The Florida-based utility is the world’s largest producer of electricity using solar and wind energy and, in October, reported a backlog of signed contracts totaling around 18,540 megawatts. While NextEra’s fortunes do not depend entirely on federal policy, there is little doubt that the company would benefit from a not-quite-dead-yet federal commitment of more than $500 billion to clean energy and the environment.

Fourteen of the 20 ratings on NextEra stock are Buy or Strong Buy. Of the rest, five are Hold ratings. At a share price of around $82.50, the upside potential based on a median price target of $90.50 is about 14.5%. At the high price target of $105, the implied gain is 27.3%.

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