Europe
Lockheed Launches New Defense System: Time to Buy or Let Go?
• Lockheed Martin Corp. (LMT) has launched a scalable, layered defense system to counter evolving small Unmanned Aerial System (UAS) threats.
• The system successfully detected, tracked, and mitigated both individual drones and swarms in a company-funded field demonstration.
• The system integrates AI-driven detection and tracking software, low-cost sensors, and advanced effectors with combat-proven command and control (C2) technology.
• The system enhances real-time threat response and could attract investors interested in defense stocks.
• LMT stock has surged 2.6% in the past year, outperforming the Zacks aerospace-defense industry’s decline of 5% and the broader Zacks Aerospace sector’s growth of 2.2%.
• Lockheed’s strong order flow for its varied products from the Pentagon and U.S. allies has always played a key catalyst in its growth story.
• Lockheed’s backlog as of Dec. 31, 2024, totaled $176 billion, reflecting an increase from the previous quarter’s level of $165.69 billion.
• The company expects to recognize approximately 35% of its backlog over the next 12 months and approximately 60% over the next 24 months.
• Lockheed’s stable financial position, with cash and cash equivalents at the end of 2024 totaling $2.48 billion, and current debt at $0.64 billion, holds a strong solvency position.
• The consensus estimate for LMT’s long-term earnings growth is pegged at a solid 7.8%.
• However, the Zacks Consensus Estimate for 2025 and 2026 sales suggests an improvement of 4.6% and 4.4%, respectively, year over year.
• Lockheed faces key industry challenges such as the shortage of skilled labor, operational risks, and a poor debt-to-capital ratio.
• Investors interested in LMT should wait for a better entry point due to its poor debt-to-capital ratio and downward revision in its near-term earnings estimates.
