Lockheed (LMT) Up 6.3% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Lockheed Martin's recent earnings report shows a mixed performance, with adjusted earnings beating estimates but a decline in GAAP earnings, leading to a downward revision in future EPS guidance. Financial Performance - Adjusted earnings for Q2 2025 were $7.29 per share, exceeding the Zacks Consensus Estimate of $6.49 by 12.3% and up 2.5% from $7.11 in the prior year [2] - GAAP earnings were reported at $1.46 per share, significantly lower than $6.85 in the same quarter last year [2] - Net sales reached $18.16 billion, missing the consensus estimate of $18.56 billion by 2.2%, but slightly up 0.2% from $18.12 billion year-over-year [4] Operational Highlights - The decline in earnings was attributed to lower consolidated operating profit compared to the previous year [3] - Backlog as of June 29, 2025, was $166.53 billion, down from $172.97 billion as of March 30, 2024, and below the projected $174.48 billion [5] - Aeronautics segment sales increased 2% to $7.42 billion, driven by the F-35 program, but incurred an operating loss of $98 million [6] - Missiles and Fire Control segment saw a 10.7% increase in sales to $3.43 billion, with operating profit rising 6.4% to $479 million [7] - Space segment revenues improved 3.5% to $3.31 billion, with operating profit increasing 4.6% to $362 million [8] - Rotary and Mission Systems segment revenues declined 12.2% to $4 billion, resulting in an operating loss of $172 million [9][10] Financial Condition - Cash and cash equivalents totaled $1.29 billion, down from $2.48 billion at the end of 2024 [11] - Cash from operating activities was $1.61 billion, compared to $3.51 billion a year ago [11] - Long-term debt decreased to $18.52 billion from $19.63 billion as of December 31, 2024 [11] Guidance and Estimates - The company expects 2025 sales in the range of $73.75-$74.75 billion, with a consensus estimate of $74.32 billion [12] - Adjusted EPS guidance was lowered to $21.70-$22.00 from the previous $27.00-$27.30, with the consensus estimate at $27.21 [13] - Free cash flow is expected to be in the range of $6.60-$6.80 billion [14] Market Outlook - Estimates for Lockheed Martin have been trending downward since the earnings release, indicating a potential in-line return in the coming months [15][17] - The company currently holds a Zacks Rank 3 (Hold) [17] Industry Comparison - Lockheed Martin is part of the Zacks Aerospace - Defense industry, where GE Aerospace reported a 23.4% year-over-year revenue increase to $10.15 billion [19] - GE's EPS for the same period was $1.66, up from $1.20 a year ago, and it holds a Zacks Rank 1 (Strong Buy) [20]