Why Lockheed Martin’s growth is leading to strong earnings


Nov. 26 2019, Updated 7:35 p.m. ET

LMT’s earnings growth

As we’ve seen in the last few articles of this series, Lockheed Martin’s (LMT) management has been trying different strategies to drive growth in its revenue and earnings. These efforts seem to have paid off.

The chart above shows that Lockheed Martin has been able to continuously beat analyst estimates in earnings per share (EPS) over the past five quarters, and by a substantial margin of 12% on average. The trend is expected to persist, with the company continuing to beat analyst estimates and reinforcing strength in the business. In fact, the growth is well supported by the company’s upward revisions of earnings estimates in the first two quarters of fiscal 2014.

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The company raised its estimates for operating profit from the initial $5,175–$5,325 million to $5,475–$5,625 million at the end of the second quarter. Similarly, LMT raised its EPS (earnings per share) estimates from the initial $10.25–$10.55 to $10.85–$11.15. It also raised its cash from operations from $4,600 million to $4,800 million.

Overhead costs and capital expenses reduction are driving higher earnings despite lower revenue guidance. Effective cost management is one of the main reasons why Lockheed Martin should continue to grow its EPS in the near future.

Lockheed Martin is part of the MSCI Industrials index ETF (FIDU). Some other companies included in the ETF are General Electric (GE), Union Pacific Corp. (UNP), and 3M Co. (MMM).


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