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TheStreet Open House

Why Lockheed Martin (LMT) Stock Is Lower On Tuesday Morning

Stock quotes in this article: LMT

NEW YORK (TheStreet) -- Shares of Lockheed Martin Corp. (LMT) are down by -0.13% to $158.10 at the start of trading on Tuesday as the global security and aerospace company is still dealing with an investigation into why an engine in one of their F-35 Joint Strike Fighters caught fire on June 23.

The investigation has forced the grounding of the entire F-35 fleet, which could cause an issue for the business as the $399 billion weapons program is scheduled to make its international debut at two U.K.-based airshows beginning this Friday, the Wall Street Journal reports.

The Pentagon has not yet decided whether or not the F-35 will appear at the two shows, at least four F-35Bs, a type of the jet that can take off and land vertically, were scheduled to take part in the air shows.

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The fighter plane has already missed a scheduled international event in Scotland, a flyover during the naming of a Royal Navy aircraft carrier, the HMS Queen Elizabeth.

The Farnborough and Air Tattoo airshows are important events for U.S. contractors looking to increase international sales, the Journal added.

Separately, TheStreet Ratings team rates LOCKHEED MARTIN CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate LOCKHEED MARTIN CORP (LMT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 49.41% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LMT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • LOCKHEED MARTIN CORP has improved earnings per share by 23.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LOCKHEED MARTIN CORP increased its bottom line by earning $9.04 versus $8.34 in the prior year. This year, the market expects an improvement in earnings ($10.94 versus $9.04).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Aerospace & Defense industry average, but is less than that of the S&P 500. The net income increased by 22.6% when compared to the same quarter one year prior, going from $761.00 million to $933.00 million.
  • LMT, with its decline in revenue, slightly underperformed the industry average of 3.2%. Since the same quarter one year prior, revenues slightly dropped by 3.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has remained constant at $2,100.00 million with no significant change when compared to the same quarter last year. Despite stable cash flow, LOCKHEED MARTIN CORP's cash flow growth rate is still lower than the industry average growth rate of 44.19%.
  • You can view the full analysis from the report here: LMT Ratings Report
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