LMT Stock Rises Near Buy Point As F-35 Maker Affirms Outlook After Mixed Earnings

F-35 maker Lockheed Martin (LMT) reaffirmed 2022 outlook after delivering a mixed report for the first quarter, amid Covid-19 headwinds. LMT stock reversed higher.

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More aerospace and defense stocks report next week. General Electric (GE) and Raytheon (RTX) report April 26. Boeing (BA) and General Dynamics (GD) April 27, and Northrop Grumman (NOC) April 28.

Lockheed Martin Earnings

Estimates: Lockheed Martin earnings were seen falling 7% to $ 6.11 per share on a 4% revenue drop to $ 15.579 billion, according to FactSet.

Results: Lockheed earnings came in at $ 6.44 a share, with revenue at $ 14.96 billion. The defense contractor generated $ 1.1 billion in free cash flow (FCF), vs. $ 1.5 billion in the year-ago quarter.

FCF came in above management’s views “despite recent Covid-surge impacts on our operations and supply chain,” Lockheed CEO James Taiclet said in an earnings release. Free cash flow is cash from operations less capital expenditures.

Revenue rose slightly in the aeronautics segment. But it fell into Lockheed Martin’s other business segments – Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. Profits fall for every segment, except Space.

Lockheed delivered 26 F-35 fighter jets in Q1 vs. 17 a year ago. But it reported lower net sales of approximately $ 65 million for the F-35 program “due to lower net favorable profit adjustments and volume on production contracts.”

Outlook: The defense giant still sees full-year EPS of $ 26.70 a share and sales of $ 66 billion. That’s roughly in line with consensus, which has not been updated for the Q1 EPS beat.

The company alluded to the Russia-Ukraine war in Tuesday’s release. “Global events this quarter marked a dramatic change in the geopolitical environment and demonstrated the tremendous importance of an effective deterrent to aggression by major nation-states,” Taiclet said.

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LMT Stock

Shares of Lockheed Martin turned 0.4% higher, near 469, after falling in premarket trading on the stock market today. LMT stock eyes a 480.09 flat-base buy point with a rising relative strength line just below the March 7 peak. The flat base formed after LMT stock and other defense names soared in late February as Russia’s Ukraine invasion began.

Lockheed Martin stock has an RS Rating of 93 out of a best-possible 99, while its EPS Rating is 88.

General Dynamics stock and Raytheon Technologies were little changed, both near buy points. Boeing stock edged higher, while GE stock was flat.

F-35 Joint Strike Fighter

The critical F-35 Joint Strike Fighter program counts as Lockheed Martin’s biggest. It made up more than a quarter of LMT’s 2021 sales but continued to be impacted by the Covid-19 pandemic.

In mid-March, Bloomberg reported that the US government will buy fewer F-35 jet fighters in fiscal 2023. Lockheed Martin stock tanked on the news before rallying again.

Following the Russian invasion of Ukraine, Germany said it would buy 35 F-35 fighter jets while Canada will purchase 88.

Defense Stocks Jumped On Russia-Ukraine War

Defense stocks surged following Russia’s Feb. 24 invasion of Ukraine, while stocks at large fell.

Surprising defense experts, Moscow hit more resistance than expected in the battle against its neighbor.

The Russian invasion of Ukraine served as a wake-up call for Germany and its NATO allies, which are sending European and US-built weapons to Kyiv, including Lockheed Martin’s Javelin anti-tank missiles and Raytheon’s Stinger anti-aircraft missiles. The Biden Administration approved $ 350 million in military aid.

On Feb. 13, Lockheed Martin ended its proposed acquisition of Aerojet Rocketdyne (AJRD) after FTC opposition.

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