Lockheed Martin surpasses Q2 earnings estimates amid high demand for defense solutions

Lockheed Martin Corp (NYSE: LMT) has surged more than 2% in premarket trading on Tuesday after surpassing earnings expectations for its fiscal second quarter. 

The defense contractor, benefiting from ongoing geopolitical tensions including the Ukraine conflict, reported robust financial performance that exceeded Wall Street’s forecasts. 

The company achieved $18.1 billion in revenue and adjusted earnings of $7.11 per share, outperforming analyst predictions of $17.01 billion in revenue and $6.54 per share. 

This marks an improvement from the previous year’s figures of $16.7 billion in revenue and $6.73 per share.

Strong quarterly performance and upgraded guidance

Lockheed Martin’s quarterly earnings report highlights a total profit of $1.64 billion, a decline from last year’s $1.7 billion. 

Despite this decrease, the Bethesda, Maryland-based aerospace and defense giant demonstrated sales growth across all its business units. 

The company has also raised its full-year guidance, forecasting earnings per share between $26.10 and $26.60, with revenue expected to reach up to $71.5 billion for 2024. 

This is above the street’s estimates of $26.28 per share and $69.8 billion in revenue.

Additionally, Lockheed Martin allocated $752 million to dividend payments and $850 million to share repurchases in the second quarter. 

Although the stock is down 3% from its record high in late 2022, it has gained nearly 14% since its year-to-date low in mid-February.

F-35 program and future prospects

Lockheed Martin’s CEO, Jim Taiclet, emphasized strong demand for the company’s defense technology, including the F-35 program, which remains a top priority. 

The company’s backlog stands at approximately $160 billion, more than twice its annual revenue, reflecting robust demand for its advanced defense solutions. Lockheed Martin ended the quarter with over $1.5 billion in free cash flow.

The report comes at a significant moment as NATO member countries continue transferring F-16 fighter jets to Ukraine. 

Moreover, Lockheed Martin has commenced deliveries of its TR-3 configured F-35s this month. The company remains committed to meeting its delivery target of 75-110 F-35s in 2024.

Market reaction and future outlook

Despite the impressive earnings report and positive adjustments to its guidance, Lockheed Martin’s stock currently holds a “hold” rating on Wall Street. 

Investors will be closely watching how geopolitical developments and future contract awards influence the company’s performance and stock valuation.

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