Should You Buy, Hold or Sell Lockheed Martin Stock Post Q4 Earnings?

Core Viewpoint - Lockheed Martin Corp. (LMT) reported mixed fourth-quarter 2024 results, with earnings exceeding estimates but sales falling short, reflecting a year-over-year decline in both metrics [1][2]. Financial Performance - The company's sales decline was attributed to poor performance in two of its four business segments, alongside increased costs of sales and interest expenses [2]. - LMT ended 2024 with cash and cash equivalents of $2.48 billion, up from $1.44 billion at the end of 2023, indicating a strong financial position [2]. Stock Performance - Over the past year, LMT's stock has increased by 6%, outperforming the Zacks aerospace-defense industry growth of 0.7%, but lagging behind the broader Zacks Aerospace sector's growth of 8.7% and the S&P 500's gain of 23% [4]. - Other industry players like Embraer, RTX Corp., and Leidos Holdings have shown significant stock price increases of 118.7%, 41.7%, and 26.8%, respectively, over the same period [5]. Backlog and Revenue Prospects - LMT's backlog reached a record $176 billion at the end of 2024, up from $160.6 billion the previous year, indicating strong demand for its defense technology [9]. - The company expects to recognize approximately 35% of its backlog over the next 12 months and 60% over the next 24 months, suggesting solid revenue generation prospects [12]. Shareholder Returns - In 2024, LMT paid out $3.06 billion in dividends and repurchased 7.5 million shares worth $3.7 billion, reflecting its commitment to returning value to shareholders [10]. Industry Outlook - The global defense industry is expected to grow due to increased defense spending driven by geopolitical tensions, benefiting LMT as the largest U.S. defense contractor [11]. - The consensus estimate for LMT's long-term earnings growth rate is projected at 4.4% [13]. Earnings Estimates - The Zacks Consensus Estimate for first-quarter 2025 sales and earnings suggests improvements of 2.6% and 4.1% year-over-year, respectively, with full-year 2025 estimates also indicating growth [15]. - However, there has been a downward revision in the bottom-line estimates for both the first quarter and full-year 2025, indicating declining analyst confidence [15]. Valuation - LMT's forward 12-month price-to-earnings (P/E) ratio is 16.38X, which is a premium compared to its peer group's average of 16.18X, suggesting a higher price relative to expected earnings growth [20].