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Will Solid Segmental Performance Aid Lockheed (LMT) Q1 Earnings?

Lockheed Martin Corporation LMT is slated to release first-quarter 2024 results on Apr 23, before the opening bell.

The company delivered an average earnings surprise of 5.27% in the last four quarters. Lower equity earnings and higher interest expenses, amid solid sales volume from LMT’s major segments, are likely to have hurt the company’s first-quarter performance.

Let's see how things might have shaped up prior to the announcement.

Aeronautics to Post Solid Sales

The Aeronautics segment, which primarily manufactures advanced, combat-proven jets, and contributes almost 40% to the company’s top line, is likely to deliver impressive first-quarter results.

Lockheed Martin Corporation Price and EPS Surprise

Lockheed Martin Corporation Price and EPS Surprise
Lockheed Martin Corporation Price and EPS Surprise

Lockheed Martin Corporation price-eps-surprise | Lockheed Martin Corporation Quote

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Higher production volumes for the F-16 and classified programs are expected to have benefited this segment’s performance. Solid deliveries of F-35 jets, backed by strong international demand for this program, are likely to have also boosted this segment’s top line in the soon-to-be-reported quarter.

The Zacks Consensus Estimate for the Aeronautics unit’s first-quarter revenues is pegged at $6,557.2 million, indicating a 4.6% improvement from the prior-year period’s reported figure.

 

Impressive Projections From Other Segments

The remaining three segments are also projected to have performed favorably in the first quarter.

An increase in the production of Next Gen Interceptor, with this program making progress from its successful completion of preliminary design review toward the critical design review milestone, must have boosted LMT’s Space segment’s top line in the first quarter. Higher sales volume from the Fleet Ballistic Missile program might have also contributed favorably to this segment’s revenue growth.

The Zacks Consensus Estimate for the segment’s revenues is pinned at $3,053.7 million, indicating a 3.2% improvement from the prior-year quarter’s reported number.

Lockheed’s Missiles and Fire Control (MFC) segment provides critical missile defense support to the United States and foreign allies. A higher sales volume from tactical and strike missile programs is likely to have benefited this unit’s sales performance.

The Zacks Consensus Estimate for MFC’s first-quarter revenues is currently pegged at $2,593.5 million, indicating an 8.6% decline from the year-ago quarter’s reported figure.

Higher sales volume from the Sikorsky unit, driven by solid deliveries of Blackhawk helicopters in the international market, might have favorably contributed to the Rotary and Mission Systems (RMS) segment’s sales in the to-be-reported quarter.

The Zacks Consensus Estimate for the RMS segment’s first-quarter revenues is currently pegged at $3,697.1 million, indicating a 5.3% improvement from the top line registered in the prior-year quarter.

Solid Delivery Projections

For manufacturing companies like Lockheed, successful delivery of its manufactured goods indicates solid revenue generation. To this end, we notice that our model estimates LMT to have delivered 19 jets in the first quarter. The figure is in line with the company’s first-quarter 2023 delivery numbers.

Q1 Expectations

The anticipated sales growth in each of LMT’s major segments is likely to have boosted its revenues in the first quarter. Also, solid delivery expectations might have had a favorable impact on the company’s overall sales performance.

The Zacks Consensus Estimate for the company’s first-quarter revenues is pegged at $16.05 billion, indicating a 6.1% increase from the year-ago quarter’s reported number.

Such a solid top-line performance is likely to have aided LMT’s first-quarter bottom line. However, lower equity earnings and higher net interest expense might have hurt LMT’s earnings.

The Zacks Consensus Estimate for the defense giant’s first-quarter earnings is pinned at $5.78 per share, implying a deterioration of 10.1% from the prior-year quarter’s reported figure.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Lockheed this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is the case here as you will see below.

LMT has an Earnings ESP of +1.74% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Below are three other defense stocks that also have the right combination of elements to post an earnings beat this time around.

Huntington Ingalls Industries Inc HII is slated to release first-quarter results on May 2. HII has an Earnings ESP of +1.39% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntington Ingalls delivered a four-quarter average earnings surprise of 20.64%. The consensus estimate for first-quarter earnings is pegged at $3.49 per share, while that for sales is pinned at $2.80 billion.

L3Harris Technologies LHX is scheduled to release first-quarter results on Apr 25. LHX has an Earnings ESP of +1.98% and a Zacks Rank #3 at present.

L3Harris delivered a four-quarter average earnings surprise of 1.53%. The Zacks Consensus Estimate for LHX’s first-quarter earnings is pegged at $2.88 per share, while that for sales is pinned at $5.09 billion.

Northrop Grumman NOC is slated to report first-quarter results on Apr 25. NOC has an Earnings ESP of +1.65% and a Zacks Rank #3 at present.

NOC delivered a four-quarter average earnings surprise of 5.64%. The consensus mark for NOC’s first-quarter earnings is pegged at $5.83 per share, while that for sales is pinned at $9.77 billion.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report

Northrop Grumman Corporation (NOC) : Free Stock Analysis Report

Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report

L3Harris Technologies Inc (LHX) : Free Stock Analysis Report

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