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Lockheed Martin Corp LMT

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Morningstar’s Analysis

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A Charge on Classified Program Mars an Otherwise Solid Q2 at Lockheed; Lowering FVE to $425

Burkett Huey, CFA Equity Analyst

Analyst Note

| Burkett Huey, CFA |

Wide-moat-rated Lockheed Martin reported a solid second quarter aside from a $225 million charge on a classified aeronautics program. Management maintained its top- and bottom-line guidance and repurchased another $500 million of stock on top of the $1 billion it repurchased in the first quarter. We are decreasing our fair value estimate to $425 per share from $436 as we incorporate Morningstar’s assumption of higher taxes in our model, but we still think the stock is somewhat undervalued. We think the significant repurchases show that management agrees with our assessment that the stock is cheap.

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Company Profile

Business Description

Lockheed Martin is the largest defense contractor globally and has dominated the Western market for high-end fighter aircraft since being awarded the F-35 program in 2001. Lockheed’s largest segment is Aeronautics, which is dominated by the massive F-35 program. Lockheed’s remaining segments are rotary & mission systems, which is mainly the Sikorsky helicopter business; missiles and fire control, which creates missiles and missile defense systems; and space systems, which produces satellites and receives equity income from the United Launch Alliance joint venture.

6801 Rockledge Drive
Bethesda, MD, 20817
T +1 301 897-6000
Sector Industrials
Industry Aerospace & Defense
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 114,000