Federal Spending Cuts Do Not Hurt Lockheed Martin
Lockheed Martin Corp. (NYSE: LMT) reported second-quarter 2013 results before markets opened this morning. The defense firm posted diluted earnings per share (EPS) of $2.64 on revenues of $11.4 billion. In the same period a year ago, the company reported EPS of $2.38 and revenues of $11.9 billion. This morning's results also compare to the Thomson Reuters consensus estimates for EPS of $2.20 and $11.13 billion in revenues.
The $85 billion cut in federal spending known as the sequester has had nothing but a positive impact on the country's largest defense contractor. Lockheed Martin raised its EPS guidance for the full year to new range of $9.20 to $9.50, well above the previously announced range of $8.80 to $9.10. The revenue forecast remained unchanged, at $44.5 billion to $46 billion. The consensus estimate for the year had called for revenues of $44.9 billion and EPS of $9.01.
The company's CEO said:
Overall, we had strong operational performance and program execution across all business areas this quarter ... Even in an uncertain budget environment, our portfolio of products and capabilities, robust cash generation, and outstanding performance by our 116,000 employees, continue to deliver value to our customers and shareholders.
In Lockheed's largest segment, aeronautics, revenues were essentially flat. Only the missiles and fire control segment posted a revenue gain year-over-year. Operating profit was up in just two of the company's five operating segments.
The company's information systems and global solutions segment showed a drop of 6.8% in revenues year-over-year and a drop of 6.7% in operating profit. This segment of the company includes Lockheed's cybersecurity work.
Lockheed's shares are up 1.6% in premarket trading at $117.50, a new 52-week high if it holds. The company's 52-week range is $85.88 to $115.90. Thomson Reuters had a consensus analyst price target of around $106.70 before today's report.
Filed under: Aerospace & Defense Tagged: LMT