Lockheed Martin, the renowned defense company, is set to release its earnings report on Tuesday amidst the intensifying Israel-Hamas conflict. While the ongoing war has driven up defense stock prices, investors are focusing more on the company’s profit margins.
Earnings Expectations
According to FactSet, analysts on Wall Street are anticipating earnings per share of $6.67, with sales amounting to $16.7 billion. This figure slightly falls behind last year’s reported earnings per share of $6.87 from sales totaling $16.5 billion.
For the year 2023, current guidance suggests earnings per share of approximately $27.10, stemming from sales of about $66.5 billion.
Margin Pressure and Growth Outlook
A recent report by J.P. Morgan analyst, Seth Seifman, stated that the second-quarter backlog reached a record high. However, management remains cautiously optimistic about the pace of growth. Seifman also highlighted several challenges faced by Lockheed Martin, including inflationary pressures, new programs, and supply chain concerns, all of which are expected to impact profit margins.
Seifman projects operating profit margins of 11%, while Wall Street analysts anticipate a slightly higher figure of 12%. In comparison, operating profit margins stood at approximately 13% a year ago.
As Lockheed Martin unveils its earnings report, investors will closely scrutinize the company’s financial performance in light of the ongoing conflict and its broader implications for the defense industry.
Lockheed Offers Update on Next-Generation F-35 Jets
Lockheed Martin (ticker: LMT) investors are eagerly waiting for an update on the progress of the next-generation F-35 jets, known as TR-3, as the defense giant has yet to deliver them. While the delay in deliveries does not significantly impact earnings, it does affect cash flow.
Options Market Expecting 3% Stock Movement
Options markets are indicating that Lockheed’s shares are likely to move up or down by approximately 3% following the earnings announcement. In the past four quarterly reports, the stock has experienced an average move of 4%, with three increases and one decline in its price.
Lockheed Stock Performance and Comparison with Market
As of Tuesday’s trading, Lockheed’s stock has gained about 11% in the last 12 months. In contrast, the S&P 500 and Dow Jones Industrial Average have risen by around 19% and 13%, respectively.
Furthermore, amid the ongoing conflict between Israel and Hamas, Lockheed shares have gained approximately 10%. However, Wall Street analysts do not anticipate a significant sales boost for the U.S. defense sector due to this conflict. Nevertheless, they believe it could positively impact investor sentiment towards defense stocks, which have been underperforming in recent years due to concerns about government deficits and budget constraints.
Earnings Conference Call Details
Lockheed Martin’s management will be hosting a conference call at 11 a.m. Eastern to discuss the company’s latest earnings results.