5. Lockheed Martin (LMT) is among the largest aerospace and defense companies, with a market capitalization of $28 billion.
Its stock has rallied 11% in the past three months, but Goldman ranks it "sell" and expects 14% of downside to $70. Lockheed delivered solid quarterly results, with earnings per share of $2.11, exceeding Goldman's $2.05 forecast and the consensus estimate of $2.07. Still, declining segment profit and margin erosion are ongoing concerns for Goldman. The quarterly book-to-bill ratio came in strong at 1.6.
Goldman lifted its price target from $63 to $70 as the report lessened its degree of pessimism. On the basis of valuation, Lockheed is ostensibly attractive, costing 9.5-times forward earnings and 7.9-times cash flow, 42% and 25% industry discounts. But, in Goldman's view, value doesn't compensate investors for the company's growth deficiency. With "ongoing expectation for increased pressure on defense spending and contractor margins (potentially over an extended period of time), it is challenging to see any meaningful growth in the near to medium term."Lockheed's operating margin declined from nearly 12% to 8.8% during the fourth quarter. Lockheed's 12-month earnings per share growth rate ranks in the 36th percentile for the aerospace and defense industry. Its gross margin ranks in the eighth percentile. The stock receives "buy" ratings from just 28% of analysts, indicating poor sentiment on Wall Street.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV