COMPANY DESCRIPTION

Lockheed Martin Corporation (Lockheed Martin or “the company”) is a global security and aerospace company principally engaged in the research, design, development, manufacture and integration of advanced technology systems, products and services. Co. has five segments: Aeronautics, which researches, designs, develops, manufactures, integrates, sustains, supports, and upgrades military aircraft; Information Systems & Global Solutions, which provides technology systems, information technology applications, and management services across a range of applications; Missiles & Fire Control, which provides air and missile defense systems, tactical missiles and air-to-ground precision strike weapon systems; Mission Systems & Training, which provides ship and submarine combat systems; and Space Systems, which provides satellites, defensive missile systems, and space transportation systems.The company primarily operates in the US. It is headquartered in Bethesda, Maryland.

 

ECONOMIC MOAT

Lockheed Martin’s moat comes from decades of experience with governmental rules and regulations  that are difficult to build overnight.  Research and development and incredible switching costs are other reason for LMT’s moat.

 

OUTLOOK

Lockheed Martin continues to perform well. Lockheed's prospects appear solid. We continue to believe that it is well positioned to achieve significant profitability over the next several years. Lockheed success stems from its unique product roster, which includes several platforms that we deem essential to the defense of the United States and its allies. A perfect example is the F-35. The company delivered 109 of these fifth-generation fighters during 2014, and the U.S. government's current plan is to procure 2,443 of these planes. This program also includes eight partner nations and multiple other international customers. The F-35 will likely become the largest (by dollar value) military program in history and will fuel Lockheed's bottom line for many years to come. We expect the company's earnings to advance at a mid-single-digit rate to 2018 2020.

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STRENGTHS

  • Diversified business portfolio and balanced revenue streams reduces business risks

  • Strategic investments in technological advancements help to strengthen competitiveness 

WEAKNESSES

  • Lockheed's future is tied to the F-35 program. Delays, unsuccessful flight tests, and other negative headlines will undermine the program's profitability if they affect eventual procurement volume or embedded price escalation.

THREATS

  • Intense competition may negatively impact operations and financial condition

  • Declining defense spending by the US Government may negatively impact sales volume and business

  • Environmental costs could affect future earnings as well as the affordability of products and services

     

OPPORTUNITIES

  • Expanding UAV market provides significant growth perspective

  • Positive outlook of the global security services market could help to improve financial performance

  • Robust pipeline of contracts could help to drive sales and revenue growth

  • Strategic acquisitions of businesses could help to grow revenues and market position 

The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.  

 

The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

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