Lockheed Martin 2017 Guidance Falls Short -- Update
25 January 2017 - 2:50AM
Dow Jones News
By Doug Cameron and Ezequiel Minaya
Lockheed Martin Corp. on Tuesday reported forecast-beating
fourth-quarter earnings, though its initial 2017 profit guidance
fell short of expectations and triggered a drop in the company's
shares.
The world's largest defense company by revenue said annual sales
could surpass $50 billion for the first time in 2017 and the free
cash that has powered its big stock buyback program is also set to
rise, alongside margins at the aerospace unit that makes the F-35
combat jet.
The profitability of the F-35 remains the major concern for
investors following criticism of its cost by President Donald Trump
, triggering a commitment by Lockheed and its partners to continue
trimming the price of the planes.
Lockheed's initial 2017 profit guidance included a
lower-than-expected pension tailwind, and the company also flagged
a potential accounting issue at its Sikorsky helicopter arm.
"Lockheed has exceeded its initial EPS guidance by 6% over the
past three years, and this below-consensus initial outlook could be
interpreted as its usual conservatism," said Matthew McConnell at
RBC Capital Markets.
Its shares were down 2.6% at $250.80 in early trade, erasing
most of its year-to-date gain. Other defense stocks such as F-35
partner Northrop Grumman Corp, also declined.
Lockheed didn't discuss the F-35 dust-up with the new president
in its earnings' release, though the issue was expected to dominate
its coming investor call. The company showed the planned fall in
F-35 prices in an investor presentation.
The company expects earnings per share of between $12.25 and
$12.55 for 2017, below the $12.87 consensus among analysts surveyed
by Thomson Reuters. Revenue is expected to be between $49.4 billion
and $50.6 billion as it boosts F-35 production.
For the December quarter, Lockheed reported a profit of $988
million, or $3.35 a share, up from $933 million, or $3.01 a share,
a year earlier. Revenue climbed 19% to $13.75 billion.
Analysts surveyed by Thomson Reuters expected earnings of $3.05
a share on $13.03 billion in revenue.
Sales at the aeronautics business -- its biggest segment -- rose
23% to $5.41 billion on higher F-35 sales. Meanwhile, revenue in
its mission systems segment surged 36% thanks to the addition of
Sikorsky, which it bought in 2015.
Write to Doug Cameron at doug.cameron@wsj.com and Ezequiel
Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
January 24, 2017 10:35 ET (15:35 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Lockheed Martin (NYSE:LMT)
Historical Stock Chart
From Apr 2024 to May 2024
Lockheed Martin (NYSE:LMT)
Historical Stock Chart
From May 2023 to May 2024