Shares of Lockheed Martin (LMT) dipped in trading as the company’s F-35 program is facing challenges. However, the company reported strong third-quarter results. The defense and aerospace manufacturer reported adjusted Q3 earnings of $6.84 per share, compared to $6.77 per share in the same period last year. This was above analysts’ consensus estimate of $6.50 per share.
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Furthermore, the company’s sales increased by 1% year-over-year to $17.1 billion. This missed analysts’ expectations of $17.4 billion.
LMT’s Flagship F-35 Program
Lockheed Martin’s top line and bottom line were impacted by the F-35 program, an important component of its defense portfolio. This program has been facing challenges, particularly due to the delays in rolling out a crucial upgrade designed to enhance the fighter jet’s processing capabilities. Furthermore, prolonged contract negotiations with the U.S. Government have created further obstacles for the company.
Without a finalized agreement, Lockheed has been forced to bear procurement costs for F-35 jets in lots 18 and 19, which are slated for delivery in 2026 and 2027. The absence of a contract means the company is paying suppliers for long-lead materials, such as sensors, radars, and other electronics, without receiving reimbursement from the government. These expenses have negatively impacted both sales and profits at the business and company levels.
In fact, the company’s CFO, Jay Malave told Reuters, that the company’s financial performance in the third quarter was notably affected by the delay. He explained, “Had the program been fully funded over this period, we would have seen sales closer to about 5% growth.”
LMT Raises Quarterly Dividend
Additionally, the company’s Board of Directors authorized a fourth-quarter dividend payment of $3.30 per share, an increase of $0.15 per share over the prior quarterly dividend payment. Furthermore, LMT’s board of directors authorized a stock buyback up to an additional $3 billion, increasing the total authorization for potential future common stock repurchases to $10.3 billion.
LMT Raises FY24 Guidance
Looking ahead, management lifted its FY24 forecast and now expects revenues of $71.3 billion and earnings per share of $26.65. For reference, analysts were expecting EPS of $26.55.
Is LMT a Good Stock to Buy?
Analysts remain cautiously optimistic about LMT stock, with a Moderate Buy consensus rating based on nine Buys, six Holds, and one Sell. Over the past year, LMT has increased by more than 30%, and the average LMT price target of $616.20 implies an upside potential of 0.3% from current levels. These analyst ratings are likely to change following LMT’s results today.
