defense giant Lockheed Martin (LMT) erased expectations for its quarterly results on Tuesday morning. LMT stock erupted after the earnings report.
The maker of the F-22 and F-35 fighter jets has been a major supplier of missiles and other military equipment to Ukraine’s fight against the Russian invasion over the past year. Lockheed Martin provided High Mobility Artillery Rocket Systems (HMARS) and munitions, Javelin and Stinger missiles early in the assault. In February, US officials rejected requests for Army Tactical Missile Systems (ATACMS), manufactured by Lockheed. And the Pentagon refrained from sending Lockheed Martin and General dynamics (GD) F-16 fighter jets in order to avoid engaging in direct conflict with Russia.
Meanwhile, China has put Lockheed Martin and Raytheon (RTX) in February in retaliation for arms sales to Taiwan.
On Monday, the White House informed Congress that it plans to sell $259 million worth of F-16 equipment upgrades to Turkey, Reuters reported. The new, smaller package is separate from the proposed deal of $20 billion in new jets and 80 upgrade kits requested by Turkey in October 2021.
Results: Lockheed Martin reported adjusted earnings of $6.43 per share, unchanged from a year ago. GAAP earnings, excluding mark-to-market investment gains, increased 2.6% to $6.61 per share. Net sales reached $15.126 billion from $14.96 billion.
Operating cash flow was $1.56 billion with free cash flow of $1.27 billion.
Expectations: Analysts polled by FactSet expected Lockheed Martin earnings to fall 6% to $6.05 per share on Tuesday, while revenue edged up to $15 billion from $14.96 billion one year ago. Lockheed Martin’s earnings and revenue growth accelerated in the previous two quarters with mid-single-digit gains.
Outlook: Lockheed guided annual earnings between $26.60 per share and $26.90 per share on net sales of $65 billion to $66 billion. For the year, analysts see earnings jump 24% to $26.91 per share as revenue falls 0.36% to $65.746 billion.
LMT stock jumped 2.4% to 501.50 on Tuesday after the results, surpassing the buy point of 499.05 for its flat base. Stocks are holding above their 50- and 200-day moving averages and recovered to their 10-day line on Tuesday. The current buy zone for the model extends up to 524.
Lockheed Martin has a strong EPS rating of 85, posting just one drop in earnings in the past two years. Although its relative strength line is off the highs, Lockheed Martin still has a solid 86 RS rating. LMT stock has a composite rating of 90 out of a possible 99, which combines a number of technical indicators into one easy-to-read score.
Shares have risen 12.2% in the past three months and are up 3% this year.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
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