Lockheed Martin(NYSE:LMT), the aerospace giant, is a high-flyer in every sense of the word. Given the way the stocks have performed in the last quarter, it has become a must have in many an investor’s portfolio. The company’s consistency in providing decent returns on investment has made the stock a preferred one for most of the investors. If we look at the returns that the stock provided last year which was about 83.55%, we’d find that it was significantly higher than what was provided by other companies in the same line of business like Boeing and even Raytheon. The shareholder return for the company is also around 91% where the likes of Boeing and Raytheon provide somewhere around 78%.
How did the Company achieve this?
The company’s frequent buyback executions has powered the stocks this far and has enabled the company to consistently pay decent returns on investments. Last year, the company paid around $ 3.3 billion in the form of dividends. This resulted in an average shareholder return of 11% with respect to the market cap that the company had in the start of 2013. Investors! Take note of that?
- Warning! GuruFocus has detected 6 Warning Signs with LMT. Click here to check it out.
- LMT 15-Year Financial Data
- The intrinsic value of LMT
- Peter Lynch Chart of LMT
The company returns ample cash to the investors and if the stats are anything to go by, the returns did better than 50% of what had been originally planned. The beginning of 2014 saw the company begin on a high note having $3.57 billion under management. All in all, the company has generated brilliant returns for the investors.
Performance in 2013:
According to experts, the company has witnessed a decline of around 4% in the top line last year but was expecting an increase of 8.5% in the bottom line. The company also witnessed an EPS increase of 8% year-over-year in 2013. However, some analysts have, after evaluating Price/Book and Price/Cash flow multiples, concluded that the company is overvalued. Since they feel that the stock is overvalued, they doubt whether the company will continue to keep the growth momentum going in 2014. This can only be seen as the time passes.
Leading from the front:
Despite the rise in Russian production of arms Lockheed Martin kept moving ahead in charts like nothing’s bothering its growth. The company has several times in the past topped weapon sales rankings and did so this time around too. The company has recently entered in a deal with Rolls Royce which is worth a whopping $1 billion. The terms of the eal suggest that Lockheed has to provide around 600 engines to power C-130J Super Hercules military transport aircraft. As a result of this agreement Rolls Royce will be able to secure its AE 2100 as the engine of choice until 2035 for all the variants of C-130J. thyen there is the deal with Aerovironmment which calls for the remodeling of certain Aerovironment-built drones. Both the companies have been over the years trying to try their luck out in unmanned aircraft segment. This deal, for that matter can help both the companies take a significant step forward. This apart, the deal is aimed at integrating Lockheed’s mission systems, ground systems and technology with the planned Aerovironement aircraft.
With high returns on investment and higher shareholder value than its peers, Lockheed Martin is set to be the most sought after stock by the investors. The deals that are in line are only going to add value to the company and will therefore be attracting more investors as the return is touted to be pretty decent. All in all, I’d ask the investors to go for Lockheed any day.