Lockheed Martin Earnings: On Track To Achieve 2023 and Longer-Term Goals; Shares Fully Valued

Lockheed Martin LMT reported first-quarter results on April 18 very much in line with management’s previous expectations and our forecast. We increased our fair value estimate by just over 1% to reflect the time value of money—those forecasts are closer on April 18 than when we last published our model at the end of January.

The bright spots in the latest quarter’s results were 16% growth versus the prior year in the company’s space segment revenue and just shy of 13% growth in that segment’s operating profit. Although we do see long-term investment and opportunity for Lockheed and others in specialized parts of the burgeoning space sector, management commented that these bumper quarter results were mostly due the confluence of timing of bookings, specifically for a variety of development contracts, including missile defense, classified programs, and the NASA Orion space capsule, and that such growth was not likely to continue throughout 2023. On the downside, bookings from the United Launch Alliance were down in the quarter as no launches took place since November, and ongoing development costs reduced profitability.

Longer term, we anticipate our moderate growth forecast for Lockheed to materialize, as the U.S. Department of Defense continues to invest in preparedness for global geopolitical tension and as non-U.S. allies also replenish or grow their supplies of fighter jets, missiles, and other defense systems.