What Should Investors Know About The Future Of Lockheed Martin Corporation's (NYSE:LMT) Business?

The most recent earnings release Lockheed Martin Corporation's (NYSE:LMT) announced in September 2017 confirmed that the company benefited from a strong tailwind, eventuating to a double-digit earnings growth of 20.06%. Below is a brief commentary on my key takeaways on how market analysts view Lockheed Martin's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. See our latest analysis for Lockheed Martin

Analysts' expectations for the upcoming year seems rather subdued, with earnings increasing by a single digit 7.46%. The growth outlook in the following year seems much more positive with rates generating double digit 20.07% compared to today’s earnings, and finally hitting $5,506.2M by 2021.

While it is informative knowing the growth rate each year relative to today’s value, it may be more insightful estimating the rate at which the earnings are moving on average every year. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Lockheed Martin's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 11.87%. This means that, we can presume Lockheed Martin will grow its earnings by 11.87% every year for the next couple of years.

Next Steps:

For Lockheed Martin, I've compiled three pertinent factors you should further examine:

1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

2. Valuation: What is LMT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether LMT is currently mispriced by the market.

3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of LMT? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.