Lockheed Martin (LMT) Is Down 11.0% After Lowered Full-Year Earnings Guidance and Q2 Profit Drop

• Lockheed Martin recently posted its second quarter results, reporting net income of US$342 million and diluted earnings per share of US$1.46, both down steeply from the previous year, and lowered its full-year earnings guidance while maintaining its revenue outlook.
• In addition to launching a new fixed-rate unsecured bond offering, Lockheed Martin repurchased one million shares in the latest quarter, bringing total buybacks since 2010 to nearly 60% of shares outstanding.
• We’ll examine how the sharp reduction in earnings guidance could reshape Lockheed Martin’s investment outlook and future expectations.

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Lockheed Martin Investment Narrative Recap

If you’re considering Lockheed Martin as an investment, you need to believe in the long-term demand for advanced defense platforms despite profit pressures tied to legacy program challenges and defense budget shifts. The recent sharp earnings downgrade is a significant short-term risk, making margin recovery and contract discipline even more essential, but revenue expectations remain unchanged so the company’s immediate sales outlook is not materially affected.

Among the latest announcements, the substantial US$1.8 billion charge related to major legacy programs stands out, highlighting persistent cost overruns on complex contracts and bringing the focus squarely onto profitability risks already flagged by analysts. While buybacks and bond offerings attract attention, monitoring earnings quality and margin pressures remains most relevant for evaluating near-term catalysts and hurdles.

However, investors should not lose sight of emerging regulatory and legal headwinds, such as the potential impact from the ongoing US$4.6 billion IRS tax dispute that...

Read the full narrative on Lockheed Martin (it's free!)

Lockheed Martin's narrative projects $81.0 billion revenue and $7.1 billion earnings by 2028. This requires 4.1% yearly revenue growth and a $2.9 billion earnings increase from $4.2 billion today.

Uncover how Lockheed Martin's forecasts yield a $522.10 fair value, a 24% upside to its current price.

Exploring Other Perspectives

Twenty-two members of the Simply Wall St Community estimate Lockheed Martin’s fair value between US$393.77 and US$645.03. With so many varied viewpoints, it’s worth weighing these against recent warnings about deteriorating earnings quality and the risk of further profit compression tied to legacy programs.

Explore 22 other fair value estimates on Lockheed Martin - why the stock might be worth as much as 54% more than the current price!

Build Your Own Lockheed Martin Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Lockheed Martin research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Lockheed Martin research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Lockheed Martin's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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