What To Expect From Lockheed Martin’s Q3?

Lockheed Martin (NYSE: LMT) will report its Q3 2024 results on Tuesday, October 22. We expect the company to post mixed results, with revenue of $17.0 billion and earnings of $6.50 per share, compared to the consensus estimates of $17.4 billion and $6.50, respectively. The company will likely benefit from a robust demand environment amid ongoing geopolitical tensions, especially in the Middle East. Our interactive dashboard analysis of Lockheed Martin Earnings Preview has additional details.

Lockheed Martin is expected to see growth across its segments. The Aeronautics segment will likely see modest growth from increased production of F-16 and F-35 jets. Earlier this year, Lockheed Martin won a multi-year contract worth $17 billion to develop the next-generation interceptors to protect the U.S. from intercontinental ballistic missiles, and this will likely drive its Missiles and Fire Control segment sales growth. However, the margin may be under pressure due to higher costs at some of the company’s units and lower profit booking rate adjustments.

Looking at the previous quarter, Lockheed Martin’s Revenue grew 9% y-o-y to $18.1 billion in Q2 (versus $16.7 billion in the prior-year quarter), with its Missiles and Fire Control segment seeing a solid 13% sales growth. Rotary & Mission Systems sales were up 17%, the Space segment saw 1% revenue growth, and Aeronautics was up 6%. The company’s EPS of $7.11 was up from the $6.73 figure seen in the prior-year quarter. The company expects the 2024 revenue to be between $70.5 and $71.5 billion and earnings to be between $26.10 and $26.60.

The ongoing geopolitical issues globally have kept the defense stocks buzzing. LMT stock is trading at its lifetime high of over $600, and is up 38% year-to-date, outperforming the broader markets, with the S&P 500 index up 22%. We estimate Lockheed Martin’s Valuation to be $511 per share, reflecting over 15% downside from its current levels of $612. Our forecast is based on a 19x P/E multiple for LMT and expected earnings of $26.45 on a per share and adjusted basis for the full year 2024. The 19x figure is slightly higher than the stock’s average P/E multiple of 17x over the last five years. A slight rise in valuation multiple for Lockheed Martin seems justified in the current environment of geopolitical tensions. However, at levels of $612, LMT is trading at 23x forward expected earnings, which seems high.

LMT stock has been nearly as volatile as the broader markets in recent years. In contrast, the Trefis High Quality Portfolio, with a collection of 30 stocks, is less volatile. And it has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

While LMT stock looks like it is slightly overvalued, it is helpful to see how Lockheed Martin’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

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