Lockheed Martin Stockanalysis and Valuation

Introduction

Lockheed Martin Corp. (LMT) is a global security and aerospace company engaged in research, design, development, manufacturing, integration and sustainment of advanced technology systems, products and services. The company also provides management, engineering, cybersecurity, and a range of other services. It operates through four main business segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space.


Recently, there has been a fairly strong shift away from growth stocks to more "conservative" value stocks. Lockheed Martin is also of interest to investors because of its activities in space, especially since ARK investment manager Cathie Wood announced a "Space Exploration ETF." I believe that space exploration will play a very important role for the future generations and therefore also for us investors right now.


Business

LMT's 2020 revenue was composed as follows:

Sales per Business





Sales per Region






Source: https://www.marketscreener.com/



Growth

The Growth metrics are looking pretty good:

5Y. Average Revenue Growth (YoY): 8,5%

5Y. Average EBITDA Growth (YoY): 10,5%

5Y. Average EBIT Growth (YoY): 11%

5Y. Average Diluted EPS Growth (YoY): 28%


Here are the past growth values and the future forecasts in one diagram:





Source: https://www.marketscreener.com/ and https://seekingalpha.com/


Dividend

Current Yield (March 13.): 3,1%

Payout Ratio: 40%

5Y. Average Growth Rate: 9,7%

Dividend Growth for (only) 2 Years

Average Dividend Yield last 10Y: 3,1%


Debt

For me to verify that the company isn’t taking too much debt, I like to see that the debt is smaller than 4 times EBIT. For ASML this means: DEBT < 4 x EBIT 9,01 Mrd. USD < 8,83 Mrd. USD


Looking alright, but there isn't that much more room for debt.



Valuation (Current price: 340 USD)

The average Dividend Yield for the last 10 Years was around 3,1%. Given that, the fair price for ASML, only looking at the dividend would be around 327 USD. Which means LMT is kinda fairly valued right now, if only looking at the dividend.

On the Earnings side, we got an average PE of 15 the last 10 years. Right now, the stock is trading for a PE of around 13, which means, we have a margin of approx. 8% right now.


Are we now looking at the Earnings Estimates for the end of 2024 and also factor in the average PE of about 15 we get a Target Stock Price of around 465 USD. Which would mean as much as a total return of approx. 11,2% (considering dividends).


CONCLUSION

11,2% is a pretty good expected return. With the possible upcoming opportunities in space exploration and the fact that LMT is a pretty safe investment, I currently rate it as a BUY.



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