Lockheed Martin Is My Favorite Defense Stock

Summary

Aeronautics and Missiles and Fire Control segments are expected to post high single-digit growth in the coming quarter.

F-35 and F-16 continue to gain momentum from international communities. Missiles and Fire Control secured PAC-3 award to deliver 450 interceptors.

The budgetary environment is less likely to adversely impact Lockheed given the current political climate.

Financial analysis shows little variability in profitability and steadily growing revenue.

Buy Lockheed and hold it long term

Lockheed Martin’s (LMT) earnings guidance for 2019 is driven by Aeronautics and Missiles and Fire Control segment. The latter is its fastest growing business area with around 10% expected growth over 2018 while its largest segment Aeronautics is expected to grow in the high single-digit level. Although RMS (Rotary and Missile systems) is LMT’s second largest segment, growth in RMS is expected to have slight increases over their 2018 results, but it shouldn’t outweigh the expected positive growth from the other two segments, at least that’s what I sensed after analyzing the firm.

The Aeronautics segment is on fire, really. The last quarter showed strong momentum as indicated by increased backlog and continued interest from international communities (as I’ll discuss later). On the other hand, Missile and Fire Control has received large orders for interceptors. If you don’t want to miss the opportunities in the defense sector then Lockheed Martin should be a top consideration for your portfolio, but don’t buy Lockheed if you have a short-term orientation. more

leave a reply