Why Is Lockheed (LMT) Down 3.5% Since Last Earnings Report?

Core Viewpoint - Lockheed Martin's recent earnings report shows a positive trend in earnings and sales, despite a slight decline in share price over the past month, leading to questions about future performance leading up to the next earnings release [1][2]. Financial Performance - Lockheed Martin reported Q3 2025 adjusted earnings of $6.95 per share, exceeding the Zacks Consensus Estimate of $6.33 by 9.8%, and up 2.2% from $6.80 in the same quarter last year [2]. - Net sales reached $18.61 billion, surpassing the Zacks Consensus Estimate of $18.56 billion by 0.3%, and increased 8.8% from $17.10 billion year-over-year [3]. Operational Highlights - The backlog as of September 28, 2025, was $179.07 billion, up from $176.04 billion at the end of 2024, with significant contributions from various segments: Aeronautics ($47.51 billion), Missiles and Fire Control ($45.91 billion), Rotary and Mission Systems ($47.27 billion), and Space ($38.39 billion) [4]. - Segment performance included: - Aeronautics: Sales increased 11.9% to $7.26 billion, driven by the F-35 program, with an operating profit of $682 million [5]. - Missiles and Fire Control: Sales improved 14.1% to $3.62 billion, with an operating profit of $510 million [6]. - Space: Sales rose 9.1% to $3.36 billion, with an operating profit of $331 million [7]. - Rotary and Mission Systems: Revenues increased 0.1% to $4.37 billion, with an operating profit of $506 million [7]. Financial Condition - Cash and cash equivalents totaled $3.47 billion as of September 28, 2025, up from $2.48 billion at the end of 2024, while cash from operating activities was $5.34 billion compared to $5.95 billion a year ago [8]. - Long-term debt decreased to $20.52 billion from $19.63 billion as of December 31, 2024 [8]. Guidance and Estimates - Lockheed expects 2025 sales in the range of $74.25-$74.75 billion, slightly narrower than the previous estimate, with the Zacks Consensus Estimate at $74.20 billion [9]. - Adjusted EPS guidance has been raised to a range of $22.15-$22.35, compared to the earlier guidance of $21.70-$22.00, with the consensus estimate at $21.86 [10]. - The company anticipates generating approximately $8.50 billion in cash from operations and a free cash flow of about $6.60 billion [11]. Market Sentiment - Estimates for Lockheed Martin have trended downward over the past month, indicating a potential shift in market sentiment [12]. - The company holds a VGM Score of B, with a Growth Score of B, a Momentum Score of F, and a Value Score of B, placing it in the second quintile for value investors [13]. - Lockheed has a Zacks Rank 3 (Hold), suggesting an expectation of an in-line return from the stock in the coming months [14].