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LMT STOCK WRITE UP

LMT (LOCKHEED MARTIN)

  • P/E: 21.7
  • GAAP DILUTED EPS Y-O-Y GROWTH LAST QUARTER: $.31
  • SECTOR: ELECTRONIC TECHNOLOGY
  • ASSETS-LIABILITIES: 1.03
  • DIVIDEND: 1.82

LMT is a defense company branded as a technology stock. Although Aerospace and Defense is a field in which a large amount of money is invested for the wellbeing of the country, the largest brands are not always as visible to the common consumer as a storefront one sees on the street, or a company that advertises constantly on our computers, televisions, and radios. However, while our tax dollars are going to Aerospace and Defense, I see no reason why we, the common consumers, should not profit off of the best companies in the sector. As the largest company in the sector, LMT gives the best probability of profit.
The bulk of Lockheed Martin's profit is derived from its aeronautics segment, according to its financial data available on the company's investor relations site. Lockheed Martin is substantially reducing their cost in production per unit, and the sales volume is increasing for their aircraft, driving substantial gains in their aircraft department. Sikorsky was acquired by Lockheed's Rotary and Mission Systems segment, providing a 48% net sales increase for the full year of 2016, a profit that was partially offset by the divestiture of a less profitable department within the same segment. Therefore, the company is looking forward to increased gains from their acquisition of Sikorsky in 2017, and freedom from the burden of the department which the company disposed of in 2016.
According to the financial release, the company has an assets-liabilities ratio of 1.03. This is not as impressive of a number as many companies, however, Lockheed Martin is forced to commit a large amount of their cash to R&D in order to stay competitive in the field of defense and remain the largest contractor for the US government. Additionally, Lockheed provides a substantial dividend of $1.82. They posted a large year-over-year growth in EPS at $.31, and I expect their strategic re positioning enacted in 2016 to afford them further growth in 2017. They have a backlog of orders at $96.2 billion as of the end of 2016, ensuring they will have substantial net income in 2017 should they be able to fill the orders which have already been received. The company also has a reasonable price-to-earnings multiple of 21.7. Therefore, if the 2016 growth of 11% is bested in 2017 as company history has demonstrated is likely, the stock will grow accordingly.


SOURCES:

https://www.fpds.gov/fpdsng_cms/index.php/en/reports/62-top-100-contractors-report3.html

http://phx.corporate-ir.net/phoenix.zhtml?c=83941&p=irol-reportsOther


http://phx.corporate-ir.net/phoenix.zhtml?c=83941&p=irol-dividends
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