Fundamentals and technical indicators for the defense stock of Lockheed Martin are characterized as bullish.
Lockheed Martin Corporation is already one of the top performers in the S&P 500 for 2022, and it might only be getting started. The market fell below $400 during its summer slump, but there have been recent hints of recovery. Lockheed Martin has two strong forces working in its favor: 1) strong fundamentals, and 2) positive chart indicators. This gives reason to anticipate that the stock will trend upward over time.
Lockheed Martin manufactures security systems, aircraft, and other technology that keep people safe. With its main Sikorsky unit supplying military aircraft to each of the five branches of the U.S. armed forces, the company gets the majority of its business from the U.S. Department of Defense and federal agencies. Additionally, it sells its goods and services to several international businesses and governments. A quarter or so of total revenue now comes from the company’s international operations. Lockheed Martin’s largest division, accounting for 40% of the $67 billion in total revenue made last year, is aerospace. The manufacturing of aircraft, airlift, and sustainment goods takes place here. The Rotary & Mission Systems division, which houses the Sikorsky business and offers military customers helicopters, sensors, underwater systems, and more, comes next. Space, which sells both government and commercial satellites, and Missiles & Fire Control, which manufactures PAC-3 defensive missiles and the Terminal High Altitude Area Defense (THAAD) system for shorter-range ballistic missiles, are the last two operational units. Financially, the company is doing well, as seen by a phenomenal return on equity (ROE) of 62% for the last 12 months. The balance sheet includes a healthy mix of stock and low-cost debt, and the liquidity ratios indicate that the company will be able to cover its short-term obligations more than adequately. The most recent quarterly earnings for Lockheed Martin weren’t very impressive. Despite an increase in operating profit to 11%, revenue dropped by 9% as all four segments reported reduced sales. Two of the causes were a decline in sales to Afghanistan and lower F-25 fighter jet program production. Nevertheless, there is cause for hope for the long run because of a massive $135 billion order backlog, which is approximately double the number of sales in 2021 and is anticipated to be a steady source of cash flow for some time. Sales are also likely to increase in the upcoming quarters due to rising geopolitical tensions such as those between the United States and China and Russia-Ukraine. The Street anticipates a sharp increase in profitability in 2023 following a minor decline in earnings this year. The current sell-side estimate, suggests a gain of 24% over the impressive 2021 performance. Additionally, it means that shares of Lockheed are currently trading at a considerable discount to their 22x five-year historical average, or 15x next year’s earnings. One of the best features of Lockheed Martin stock, outside the growth prospects, is the sizable dividend and cash flow. For twenty years running, the board has increased the dividend. The cash flow is consistent; thus, it is expected to continue authorizing dividend increases for the foreseeable future. The chart prognosis for Lockheed Martin is likewise very bullish. A triple moving average (MA) crossing involving the 4-day, 9-day, and 18-day MA lines happened last week. Along with the stock’s successful recovery above the 50-day MA, this indicates that a short-term rally is currently in motion. On August 2, after a solid five-day winning streak with rising volume, the share price once again crossed the significant 50-day trend line.
The commodity channel indicator, or CCI, which gauges how much price has deviated from its 20-bar average value, is another optimistic development. Because it suggests that the stock is making an especially strong move to the higher that could portend a wider ascent, the CCI oscillator crossing over the 100 mark is regarded as a bullish occurrence. The next significant test for Lockheed Martin will occur at about $443 from a support and resistance perspective. The stock has had a difficult time separating itself from this 250-bar long-term resistance level. Even the most effective anti-missile systems might not be able to prevent it from breaking existing records if they can make a loud statement to move past this.