$Lockheed Martin(LMT)$ is expected to announce its Q1 2025 earnings results before the market opens on Tuesday, 22 April 2025.
Analysts forecast revenue to be around $17.76 billion to $17.79 billion. This represents a modest year-over-year increase of approximately 3.3% to 3.4%.
Consensus estimates for EPS are in the range of $6.34 to $6.42. This suggests a slight increase (around 0.5% to 1.4%) compared to the $6.33 reported in Q1 2024.
Lockheed Martin (LMT) Last Neutral Earnings Call Saw Share Price Decline By 4.58%
Lockheed Martin had a neutral earnings call on 28 Jan 2025 and its share price had decline by 4.58% since.
The earnings call revealed a strong performance with record backlog and sales growth driven by strategic investments and successful program execution, notably in the F-35 program. However, significant charges related to classified programs and challenges in some segments, particularly Aeronautics and RMS, were notable setbacks.
Lockheed Martin (LMT) Guidance
During the Lockheed Martin Fourth Quarter and Full Year 2024 Earnings Results Conference Call, several key metrics and guidance for 2025 were highlighted. Sales in 2024 grew by 5% year-over-year, with the backlog reaching a record $176 billion, and each business segment achieving a book-to-bill ratio greater than 1. For 2025, the company anticipates mid-single digit sales growth, a return to 11% operating profit margins, and double-digit growth in free cash flow per share. Free cash flow in 2024 was $5.3 billion, with $3.7 billion allocated to share repurchases.
The company delivered 110 F-35 aircraft in 2024, with a projection of 170 to 190 deliveries in 2025. Additionally, Lockheed Martin invested $3.3 billion in R&D and capital expenditures in 2024 to support advanced technology solutions.
Key Factors Influencing Lockheed Martin (LMT) Q1 2025 Earnings
Government Contracts & Backlog
Growth Driver: Lockheed’s revenue is heavily tied to U.S. and allied defense budgets. A strong backlog ($160+ billion as of 2023) ensures steady cash flow if contracts are executed on schedule.
Lockheed Martin's backlog reached a record $176 billion, with a 10% increase year-over-year, demonstrating strong demand for their products. Sales grew by 5% year-over-year in 2024, supported by strong demand across all business areas.
Risks: Delays in programs (e.g., F-35 deliveries, Next-Gen Interceptor) or cost overruns under fixed-price contracts could pressure margins.
Recorded $1.8 billion in charges in Q4 related to classified programs at MFC and Aeronautics, impacting operating profit.
Geopolitical Environment
Rising global tensions (e.g., Ukraine, Taiwan, Middle East) may drive increased defense spending, benefiting LMT’s missiles, aerospace, and hypersonics divisions.
Recorded over $29 billion in orders in Q4, with Aeronautics leading with almost $20 billion driven by the F-35 contracts.
Conversely, diplomatic resolutions or budget reallocations (e.g., to domestic programs) could slow growth.
U.S. Defense Budget
The FY2025 U.S. defense budget (finalized in late 2024) will be critical. Bipartisan support for modernization (space, cyber, hypersonics) favors LMT.
Delivered 110 F-35 aircraft in 2024, meeting the high end of the expected range, with plans for 170 to 190 deliveries in 2025.
Risks include sequestration or spending caps in a divided Congress.
Supply Chain & Inflation
Defense supply chains (e.g., semiconductors, rare earth metals) remain fragile. Inflationary pressures on labor/materials could squeeze margins if contracts lack inflation adjustments.
Invested $3.3 billion in research and development and capital expenditures to support advanced technology solutions.
Segment Performance
Aeronautics (F-35, C-130J): Production ramp-up or slowdowns. Net sales expected around $6.98 billion (+2% YoY), with operating profit near $688.5 million. Aeronautics segment operating profit decreased 11% for the full year due to lower profit rate adjustments and classified program charges.
Missiles & Fire Control (THAAD, Javelin): Demand linked to global conflicts. Net sales expected around $3.20 billion (+6.9% YoY), with operating profit potentially rising significantly to around $462.4 million (compared to $311 million in Q1 2024).
Space: Growth in satellite and exploration programs (NASA partnerships). Net sales expected around $3.22 billion (-1.5% YoY), with operating profit near $307.5 million.
Rotary & Mission Systems (Sikorsky helicopters, cybersecurity): Steady demand. Net sales expected around $4.31 billion (+5.4% YoY), with operating profit near $465.2 million. RMS sales decreased 10% in Q4 due to lower volume on several key programs.
Shareholder Returns
Lockheed’s consistent dividends (3%+ yield) and buybacks depend on free cash flow. Contract delays or R&D spend could impact returns.
ESG Pressures
Defense contractors face scrutiny over ethics and sustainability. ESG-focused investors may demand cleaner energy initiatives (e.g., green propulsion).
Lockheed Martin (LMT) Price Target
Based on 16 Wall Street analysts offering 12 month price targets for Lockheed Martin in the last 3 months. The average price target is $516.38 with a high forecast of $600.00 and a low forecast of $432.00. The average price target represents a 8.24% change from the last price of $477.08.
I think in order for LMT to move to the higher end of the price target we will need to monitor quarterly updates on contract awards and backlog growth.
There is also the margin trends we need to consider where fixed-price contracts (e.g., F-35) risk margin compression if costs rise. The R&D pipeline where progress on next-gen tech (AI-driven systems, directed energy weapons).
I will also be watching LMT valuation as LMT’s P/E (historically 15-20x) vs. peers (Northrop Grumman, RTX). Dividend sustainability (payout ratio ~40%).
Technical Analysis - Exponential Moving Average (EMA)
If we looked at how LMT have been trading, it looks like the bulls are back in control, though momentum is growing as seen from RSI moving higher, but still not enough for the price to move above the 200-day period.
The bulls have been building the daily uptrend and I am expecting to see a daily uptrend expansion into next week before its earnings, so here are the two scenarios where we might see a gap up if the bull case happen.
Bull Case : Lockheed Martin (LMT) is experiencing accelerated F-35 deliveries, partly due to a backlog of aircraft that were held due to software upgrade delays. In 2024, they delivered 110 F-35s, increasing the global fleet to over 1,100. They are also aiming to deliver a significant number of F-35s in 2025, including both new aircraft and those that have been in storage.
if there is an accelerated F-35 deliveries, new hypersonic missile contracts, and a surge in international orders (NATO allies). U.S. defense budget grows 5%+. Margins expand due to cost controls. EPS beats estimates.
But the Bear Case could happen if there is a program delays (e.g., F-35 software issues), defense budget cuts, or supply chain disruptions. Inflation erodes margins, and free cash flow declines. EPS misses estimates.
Summary
Lockheed Martin exceeded consensus EPS estimates in the previous four quarters. However, the company's stock faced pressure after Q4 2024 results, which included significant losses on classified programs impacting GAAP EPS, and more recently after losing a fighter jet contract to Boeing.
Lockheed Martin’s Q1 2025 earnings will likely reflect its role as a defense sector bellwether, balancing stable government-funded revenue with execution risks. Geopolitical tailwinds and modernization trends support long-term growth, but margin pressures and budget uncertainty pose risks.
I think we should watch closely at the segment performance, updates on major programs like the F-35, backlog figures, and the company's outlook for the rest of 2025 when the official results are released.
Appreciate if you could share your thoughts in the comment section whether you think LMT could be still able to provide an earnings surprise as defense spending might still increase with the recent geopolitical tensions.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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