For Immediate Release
Chicago, IL – February 28, 2022 – Today, Zacks Investment Ideas features: Lockheed Martin Corp. LMT and General Dynamics Corp. GD.
Aerospace Giants Hitting 52-Week Highs
The bulls are attempting to make a stand as we close out the last few trading days of February. The price action has been impressive with the S&P 500 rallying over 5% off Thursday’s intraday low.
Even with the recent bullish movement, it isn’t too difficult to find a stock that’s hovering near its lows over the last year as most stocks have been hit hard by the recent market volatility. Whether we’re viewing growth stocks, value stocks, small-caps, large-caps or somewhere in between, a high percentage of stocks are in bear market territory.
That’s not the case with the two aerospace and defense giants we will analyze below. These companies have been bucking the trend this year and are both hitting their respective 52-week highs today. They have held up extraordinarily well through this market correction and are displaying relative strength as we head into the historically bullish month of March.
Our Zacks Style Scores are a great complementary indicator and are based on academic research which has proven that stocks with the best value, growth and momentum characteristics outperform the market. In addition to the three individual style scores, we also produce an overall ‘VGM’ score that can help identify stocks that are leading across the board. Our two defense stocks sport the highest possible VGM ranking of ‘A’ – an indication that investing in these stocks may lead to a high probability of success.
Both aerospace behemoths are components of the Zacks Aerospace and Defense industry group, which currently ranks in the top 41% of more than 250 Zacks Ranked Industries. Historical research studies have shown that approximately half of a stock’s price movement can be attributed to its industry grouping. By investing in stocks located within the top industry groups, we can provide a ‘tailwind’ to our investing success.
Lockheed Martin Corp.
Lockheed Martin is a global aerospace and security firm that engages in the design, research, development, integration and sustainability of advanced technology systems and services. LMT provides a variety of defense solutions such as combat and mobility aircraft, missile defense, radar, and cybersecurity systems. The company is the largest defense contractor in the world and primarily serves the U.S. government while also contracting with foreign military agencies. Lockheed Martin was founded in 1912 and is based in Bethesda, MD.
LMT benefits from a steady order flow from the Pentagon. The fourth quarter of last year was no different when the aerospace company clinched a lucrative $4.9 billion dollar deal to support operations and the sustainment of its F-35 Fighter jets. Lockheed is in a very stable position from a liquidity standpoint as the company paid out dividends worth $2.9 billion last year to shareholders – a 3.6% increase versus 2020.
LMT has produced a positive earnings surprise in each quarter for the past four years running. The defense contractor most recently reported Q4 EPS of $7.24, a +0.14% surprise over the consensus estimate. Lockheed has delivered a four-quarter trailing average EPS surprise of +63.32%. Shares have advanced nearly 14% this year while the market has been in a correction.
Lockheed Martin stock trades at a reasonable valuation with a forward P/E of 14.63 that compares favorably to the industry average of 17.06. Analysts have increased their full-year earnings estimates by 1.4% in the past 60 days. The 2022 Zacks Consensus EPS Estimate is now $26.71, reflecting growth of 18.03% relative to last year. LMT is slated for its first quarterly earnings report for the current fiscal year on April 19th.
General Dynamics Corp.
General Dynamics is a global aerospace and defense company that provides a wide array of products and services. The firm manufactures and sells business jets, offers aircraft maintenance and repair, and builds nuclear-powered submarines for the U.S. Navy. GD also provides land combat and intelligence, surveillance, and reconnaissance solutions to military, intelligence, and federal customers. General Dynamics was founded in 1899 and is headquartered in Reston, VA.
GD has surpassed earnings expectations in each of the past three quarters. The defense contractor most recently reported Q4 EPS back in January of $3.39, a +0.59% surprise over the consensus estimate. GD has delivered an average earnings surprise of 3.72% over the past four quarters, aiding the stock’s 38.53% return in the past year. Shares have already climbed over 8% to kick off 2022 on a solid note.
Sales and earnings trends for the current year appear promising. The 2022 EPS Zacks Consensus Estimate stands at $12.16, which would translate to growth of 5.28% relative to last year. Sales are expected to climb 2.35% to $39.37 billion. GD is scheduled to report its Q1 results on April 27th.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Lockheed Martin Corporation (LMT): Free Stock Analysis Report
General Dynamics Corporation (GD): Free Stock Analysis Report
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