Shares of aerospace and defense giant Lockheed Martin Corp. (LMT, Financial) slid 2.4% before the opening bell on Tuesday after reporting fourth-quarter and full-year 2018 results.
The Bethesda, Maryland-based company, which is one of the world’s top weapons manufacturers, posted earnings of $4.39 per share, just shy of Refinitiv’s estimates of $4.40. Revenue, though, grew from the prior-year quarter to $14.4 billion, beating expectations of $13.75 billion.
For the year, the company recorded earnings of $17.59 per share on $53.8 billion in revenue.
By segment, sales in Lockheed’s Aeronautics, Missiles and Fire Control and Space divisions rose 4%, 22% and 2%, while revenue in its Rotary and Mission Systems business declined 4%. While operating margins increased in most of its segments, its largest business, Aeronautics, saw margins deflate to 10.6% from a year ago.
The company also noted that its backlog grew 19% to reach a record $130.5 billion at the end of 2018. The company closed out the year having delivered 91 F-35 jets, up from 66 jets in 2017. It projects delivering more than 130 jets in 2019.
In a statement, Chairman, President and CEO Marillyn Hewson shared her hopes for the new year.
“As we look ahead to 2019, we remain focused on performing with excellence for customers, and our record backlog and differentiating portfolio have us well-positioned for continued growth and long-term value creation for shareholders,” she said.
Despite Hewson's optimism, the company’s guidance for fiscal 2019 disappointed investors. The outlook for earnings is $19.15 to $19.45 per share, which is below analysts’ projections of $19.57 for the year. Lockheed Martin also anticipates revenue between $55.7 billion and $57.2 billion.
While Lockheed Martin and other U.S. aerospace and defense companies, like Boeing (BA, Financial), Raytheon (RTN, Financial), United Technologies (UTX, Financial), Northrop Grumman (NOC, Financial) and General Dynamics (GD, Financial), are expected to benefit from higher military budgets as well as increased global demand for fighter jets and munitions in 2020, the company cautioned “the impact of government shutdowns" may skew its forward-looking statements.
With an $82.75 billion market cap, shares of Lockheed Martin were trading around $290.67 on Tuesday with a price-earnings ratio of 26.95, a price-sales ratio of 1.53 and a price-book ratio of 87.76. GuruFocus estimates the stock tumbled 18% in 2018. It has climbed approximately 11% year to date.
Disclosure: No positions.
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