F-35 maker Lockheed Martin (LMT) reaffirmed 2022 outlook after delivering a mixed report for the first quarter, amid Covid-19 headwinds. LMT stock fell in choppy trade.
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The defense contractor said it is in talks with the Pentagon about raising weapons production for Ukraine, but it has yet to increase output. Lockheed also makes the Javelin anti-tank missiles with Raytheon Technologies (RTX).
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. Year over year, earnings fell 2% and revenue fell 8%. Lockheed generated $1.1 billion in free cash flow (FCF), vs. $1.5 billion in the year-ago quarter.
But 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 in Lockheed Martin’s other business segments — Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. Profits fell 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 hasn’t been updated for the Q1 EPS beat.
The company hinted at higher defense spending following the Russia-Ukraine war. “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 in Tuesday’s release.
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LMT Stock
Shares of Lockheed Martin fell 1.3%, near 461, after rising earlier 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 and Raytheon Technologies rose 0.5% , with both near buy points. Boeing stock gained 3.7%, while GE stock advanced 1.8%.
General Electric (GE) and Raytheon (RTX) report April 26. Boeing (BA) and General Dynamics (GD) April 27, and Northrop Grumman (NOC) April 28.
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 U.S. 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.
Following the Russian invasion of Ukraine, Germany and its NATO allies are sending European and U.S.-built weapons to Kyiv. Those weapons include Lockheed Martin’s Javelin anti-tank missiles and Raytheon’s Stinger anti-aircraft missiles.
The U.S. also vowed more than $3 billion in military aid to Ukraine, including Javelin missiles.
On Feb. 13, Lockheed Martin ended its proposed acquisition of Aerojet Rocketdyne (AJRD) after FTC opposition.
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