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Here's why Lockheed stock is crashing
LMTLockheed Martin(LMT) Finbold·2025-01-29 10:51

Core Viewpoint - Lockheed Martin is experiencing significant challenges despite being the largest defense contractor in the U.S., with stock prices declining sharply due to disappointing earnings and external pressures [1][4]. Financial Performance - For Q4 2024, Lockheed reported earnings per share (EPS) of 2.22,whichfelldrasticallyshortofconsensusestimatesof2.22, which fell drastically short of consensus estimates of 6.62 [5]. - Revenues for the quarter were 18.6billion,belowanalystexpectationsof18.6 billion, below analyst expectations of 18.84 billion [5]. - The EPS represented a 70% decline from Q4 2023, where it was 7.58[5].LossesandAdjustments−Thecompanyincurreda7.58 [5]. Losses and Adjustments - The company incurred a 1.7 billion pre-tax loss on classified programs, which significantly impacted the reported EPS [6]. - After accounting for this one-time loss, the adjusted EPS was 6.67,slightlyaboveanalystestimates[6].MarketReaction−Followingtheearningsreport,Lockheed′sstockdropped8.96.67, slightly above analyst estimates [6]. Market Reaction - Following the earnings report, Lockheed's stock dropped 8.9% from 503.69 on January 27 to 458.46byJanuary29[2][4].−Thestockisnowtradingatlevelscomparabletomid−March2024,indicatingaprolongeddownturn[2].ExternalFactors−InvestorconfidencehasbeenshakenduetoF−35deliverydelaysandpotentialbudgetcutsfromthegovernment,particularlyinfluencedbyElonMusk′scriticismsoftheF−35program[3].−Lockheedisfacingsignificantheadwindsasamajordefensecontractor,makingitvulnerabletobudgetaryconstraints[3].FutureOutlook−Despitetherecentpullback,theremaybepotentialforrecoveryasLockheedhasasubstantialbacklogof458.46 by January 29 [2][4]. - The stock is now trading at levels comparable to mid-March 2024, indicating a prolonged downturn [2]. External Factors - Investor confidence has been shaken due to F-35 delivery delays and potential budget cuts from the government, particularly influenced by Elon Musk's criticisms of the F-35 program [3]. - Lockheed is facing significant headwinds as a major defense contractor, making it vulnerable to budgetary constraints [3]. Future Outlook - Despite the recent pullback, there may be potential for recovery as Lockheed has a substantial backlog of 176 billion, indicating ongoing demand and revenue reliability [7]. - Congressional support for the company has been noted, suggesting potential buying opportunities for investors [7].