We maintain our ‘Neutral’ rating on a long-term basis (6-12 months) on the defense behemoth Lockheed Martin Corporation (LMT). Looking ahead, Lockheed expects its fiscal 2011 earnings to come in at $6.95 – $7.25 with revenues in the range of $45.8 billion-$47.3 billion. The Zacks Consensus earnings estimates for the second quarter, fiscal 2011 and fiscal 2012 are $1.92, $7.28 and $8.73, respectively.

Currently, Lockheed Martin has a Zacks #3 Rank, which implies a short-term ‘Hold’ rating. In the near term the stock is expected to perform in line with the market. The company competes primarily with The Boeing Company (BA) and Northrop Grumman Corporation (NOC).

Based in Bethesda, Maryland, Lockheed Martin is a global security company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The company’s major customers include the U.S. government, foreign governments, and other commercial buyers. The company employs about 133,000 people worldwide.

The world’s largest U.S. defense contractor, Lockheed reported strong numbers in the most recent quarter, with EPS of $1.55 beating both the Zacks Consensus Estimate and lagging the year-ago quarterly numbers.

Lockheed Martin finished first-quarter 2011 with a backlog of $80 billion versus $78.40 billion at fiscal-end 2010. Of this, $31.30 billion belonged to the Aeronautics segment and $22.60 billion to the Electronic Systems segment.

Lockheed continues to benefit from strong defense spending on a number of its platform programs like the F-35 Lightning II Joint Strike Fighter, C-130 Hercules transport aircraft, the Patriot Advanced Capability-3 (PAC-3) and many others. The company’s backlog could see further upside in the near future through satellite contracts for its Space systems business and successful negotiation for further fixed contract F-35 follow-on orders.

However, the threat of cutbacks in the 2012 defense budget may largely drive down Lockheed’s future topline as a major portion of its business comes from the U.S. government. Additionally, a receding order backlog, headwinds in margins, execution risk of major programs, cost over-runs, higher pension liability as well as risk regarding retrenchment cost recovery, are other factors plaguing the stock’s outlook.

 
BOEING CO (BA): Free Stock Analysis Report
 
LOCKHEED MARTIN (LMT): Free Stock Analysis Report
 
NORTHROP GRUMMN (NOC): Free Stock Analysis Report
 
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