Why Lockheed Martin Stock Falls Today
stock lockheed martin (LMT -4.16%) The defense and aerospace giant fell 4.2% on Tuesday after its stronger-than-expected quarterly results and mixed outlook for next year. The market also appears concerned about the risk of delays surrounding the first delivery of the next-generation F-35 fighter jet.
Lockheed Martin’s 2023 Ends with a Strong End
Lockheed’s fourth quarter 2023 net sales decreased 0.6% year-over-year to $18.87 billion, and adjusted (non-GAAP) earnings increased 1.4% on a per-share basis to $7.90 during the same period. Analysts, on average, modeled low earnings of $7.26 per share on revenue of $17.97 billion.
Jim Taiclet, Lockheed Martin’s chairman and CEO, called it “a solid finish to 2023” and acknowledged “strong demand for our full-area portfolio of advanced defense technology solutions.”
In fact, Lockheed’s order backlog increased 7% in 2023 to $160.6 billion, and annual sales increased 2% to $67.6 billion. The company also generated solid free cash flow of $6.2 billion for the year, and speaking of its relative earnings outperformance, it returned more than $9 billion to shareholders through dividends and share repurchases.
What’s next for Lockheed shareholders?
Lockheed Martin announced full-year net sales guidance of $68.5 billion to $70 billion for 2024, slightly higher than Wall Street’s consensus estimate of $68.65 billion. Lockheed also estimated 2024 earnings per share of $25.65 to $26.35, below its estimate of $27.21 per share.
In a follow-up conference call, Lockheed executives warned that ongoing software issues with the next-generation “TR-3” version of the F-35 fighter jet could delay the first delivery of the upgraded fighter until the third quarter of 2024. TR-3 software will equip the new version of the F-35 with advanced munitions, sensing, jamming and cybersecurity capabilities. Lockheed previously told investors it expects to begin shipping the next-generation F-35 by the second quarter.
In any case, there were no major surprises in Lockheed Martin’s quarterly update. The company remains a solidly profitable industry leader that pays a healthy dividend, yielding nearly 2.9% annually at current prices. However, given the potential for gradual delays to one of its key programs, it wouldn’t be surprising to see the stock fall.
