Lockheed Martin Stock Fair Value – Lockheed Martin Q4 Results Exceed Expectations, But Downgrade from “Buy” Still on the Table
January 30, 2023
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Lockheed Martin Stock Fair Value – Lockheed Martin ($NYSE:LMT), one of the world’s foremost defense contractors and aerospace companies, recently released their fourth quarter results which exceeded expectations. Despite the positive news, I am still considering a downgrade from “Buy” to “Hold” for their stocks. This is due to the potential risks associated with investing in a company that primarily operates in the defense sector. The fourth quarter results for Lockheed Martin were impressive. These impressive results are the result of the company’s strategy of diversification and cost cutting measures. Lockheed Martin has invested heavily in research and development and is now well-positioned to capitalize on emerging opportunities in areas such as cyber security, artificial intelligence, and autonomous systems. Additionally, their cost cutting initiatives have enabled them to remain competitive and remain profitable despite a decrease in government spending in recent years.
However, despite these positive results, there are still potential risks associated with investing in Lockheed Martin stock due to their reliance on the defense sector. The company is heavily reliant on government contracts and there is always the risk that government spending could be reduced or redirected due to changing political priorities or budgetary constraints.
Additionally, the defense sector is highly cyclical and there is always the risk that the company could be adversely affected by an unexpected decrease in demand for their products and services. Although the fourth quarter results were impressive and demonstrate that the company is well-positioned to capitalize on emerging opportunities, there are still risks associated with investing in the stock that need to be taken into account.
Market Price
The media sentiment surrounding the results are currently mixed. The stock opened at $442.2 and closed at $449.2, up by 1.8% from prior closing price of 441.3, indicating that investors were pleased with the results. This was largely attributed to increased sales in their defense and space businesses, as well as cost cutting initiatives.
However, despite the positive news, the company is still facing a possible downgrade from “Buy” to “Hold” by the investment bank, Merrill Lynch. The bank cited their concerns about the potential for a decline in U.S. defense spending under the new Biden administration, as well as the potential for increased competition from other defense contractors. However, until the Biden administration’s plans for defense spending are known, investors remain uncertain about the company’s future prospects. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Lockheed Martin. More…
| Total Revenues | Net Income | Net Margin |
| 65.98k | 5.73k | 8.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Lockheed Martin. More…
| Operations | Investing | Financing |
| 7.8k | -1.79k | -7.07k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Lockheed Martin. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 52.88k | 43.61k | 45.66 |
Key Ratios Snapshot
Some of the financial key ratios for Lockheed Martin are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 3.3% | -0.1% | 11.1% |
| FCF Margin | ROE | ROA |
| 9.3% | 43.0% | 8.6% |
VI Analysis – Lockheed Martin Stock Fair Value
LOCKHEED MARTIN is a large multinational aerospace and defense corporation with a strong presence in the global market. The company’s fundamentals provide insight into its long-term potential. Analyzing these fundamentals can help investors determine if the stock is currently a good investment. Using the Visualize It (VI) app, investors can quickly and easily assess the intrinsic value of LOCKHEED MARTIN stock. The VI Line tool estimates the current intrinsic value to be around $428.9. Currently, the stock is trading at $449.2, which is a fair price, albeit slightly overvalued by 5%. Investors should keep in mind that even though the stock may be trading at a fair price, there may be other companies with more attractive fundamentals. Therefore, investors should take into account the company’s fundamentals, such as profitability, debt levels, and cash flow, before making any investment decision. Additionally, investors should consider the company’s growth prospects, competitive landscape, and macroeconomic factors before investing in LOCKHEED MARTIN. More…
VI Peers
The U.S. Department of Defense (DoD) spends billions of dollars on weapons systems each year. Major weapons systems contractors compete for these funds. The competition among these companies is fierce. The companies must not only offer the best products, but they must also be able to demonstrate to the DoD that their products are superior to those of their competitors.
Lockheed Martin Corp is one of the largest weapons systems contractors in the United States. The company’s main competitors are Northrop Grumman Corp, Ballistic Recovery Systems Inc, and LIG Nex1 Co Ltd.
– Northrop Grumman Corp ($NYSE:NOC)
Northrop Grumman Corp is an American aerospace and defense technology company with a market cap of 78.41B as of 2022. The company has a Return on Equity of 34.54%. Northrop Grumman Corp is a leading provider of aircraft, logistics, and technology solutions for the U.S. military, government, and commercial customers. The company’s products and services include aircraft, space systems, missiles, electronics, and technical services.
– Ballistic Recovery Systems Inc ($OTCPK:BRSI)
Ballistic Recovery Systems Inc is a world leader in the design, manufacture, and deployment of parachutes and other soft goods for the aerospace industry. The company has a market cap of 4.19M as of 2022 and a ROE of -159.06%. Ballistic Recovery Systems Inc is a publicly traded company on the Nasdaq Stock Market under the ticker symbol BRS.
– LIG Nex1 Co Ltd ($KOSE:079550)
LIG Nex1 Co Ltd is a South Korean defense company specializing in electronics and weaponry. It was founded in 1999 and is headquartered in Seoul. The company has a market cap of 1.87T as of 2022 and a Return on Equity of 14.92%. LIG Nex1 Co Ltd develops, manufactures, and supplies electronics and weapons products for the military, law enforcement, and commercial markets worldwide. The company’s products include radar systems, sonar systems, electronic warfare systems, communication systems, navigation systems, and missile systems.
Summary
However, despite the strong performance, some analysts have downgraded their rating on the stock to “Hold” due to uncertainty in the sector and lack of visibility on the company’s future. Media sentiment towards the stock is mixed, with some investors being optimistic while others remain cautious. With geopolitical tensions and a volatile stock market, investors should remain aware of the risks associated with investing in Lockheed Martin.
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