NEW YORK (TheStreet) -- Lockheed Martin (LMT) - Get Report stock is down by 2.93% to $204.83 in morning trading on Tuesday, after the company released its 2015 fourth quarter financial results and announced a $5 billion deal with rival Leidos (LDOS) before the market open.
The defense contractor posted earnings of $3.01 per share, up from earnings of $2.82 per share for the year-ago quarter.
Revenue advanced to $12.92 billion from $12.53 billion year-over-year.
Analysts surveyed by Thomson Reuters expected the company to report earnings of $2.94 per share on revenue of $11.9 billion.
"The successful closure of the Sikorsky acquisition and completion of the strategic review of our IS&GS businesses, coupled with our record backlog, position the corporation for future growth and value creation for our customers and our stockholders," CEO Marillyn Hewson said in a statement.
Lockheed Martin expects full-year 2016 earnings to range between $11.45 and $11.75 per share on revenue ranging between $49.5 billion and $51 billion. Analysts have estimated for earnings of $12.16 per share on revenue of $49.5 billion for the year.
Additionally, the company announced that it has agreed to separate and merge its Information Systems & Global Solutions segment with Leidos.
Lockheed Martin will receive a one-time cash payment of $1.8 billion, and its shareholders will receive 50.5% equity in Leidos, valued around $3.2 billion and subject to regulatory approval.
Insight from TheStreet Research Team:
Jim Cramer, Portfolio Manager of Action Alerts PLUS and Jack Mohr, Director of Research mentioned Lockheed Martin in a recent post. Here is a snippet of what Jim Cramer and Jack Mohr had to say about the stock:
From a capital allocation standpoint, the company repurchased $707 million worth of shares and paid $505 million worth of dividends in the fourth quarter (both higher than the previous year), which reaffirms the company's robust capital return story, which represents a crucial pillar to our investment thesis. We expect this trend to continue and will be listening for any details on expected buybacks for the year on the call.
Lockheed provided initial 2016 outlook. Given lack of detail in the release, it is impossible for us to definitively bridge the gap between the convincing guidance beat (relative to consensus) on the top line and severely disappointing miss (relative to consensus) on the bottom line.
We would note that the implied 10% segment operating margin falls roughly 70 basis points below sell-side expectations. In and of itself, this would be indisputably disappointing; given the multiple deals in the mix (Sikorsky and Leidos), however, and in the absence of management extrapolation, we will have to wait for the company's 11:00am EST conference call this morning before jumping to any conclusions. In other words, while we can back out an "implied" operating margin, we are missing several crucial variables.
-Jim Cramer and Jack Mohr "Lockheed Martin Results Beat Expectations" Originally Published on 1/26/2016 on Action Alerts PLUS.
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Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of B+.
The company's strengths such as its revenue growth, notable return on equity, good cash flow from operations, solid stock price performance and growth in earnings per share outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
You can view the full analysis from the report here: LMT
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.