Summary
- Lockheed Martin closed the most recent trading session at its all-time high.
- The company's first quarter saw growth in all areas.
- Lockheed Martin has increased its dividend for more than a decade and has a very low payout ratio.
- I find that the stock is just slightly overvalued today, making it eligible for purchase under my investment rules.
Shares of Lockheed Martin (LMT) closed at an all-time high of $362.80 on Thursday, June 20th. The stock has returned 38.6% year-to-date, easily outpacing the 24.9% return for the Aerospace & Defense Sector (ITA) and 17.8% gain for the S&P 500.
After such an incredible gain in such a short time, is Lockheed Martin a good purchase today? This article will review the company’s most recent earnings results, analyze the dividend and determine a price target using my system for valuing stocks.
Company Background
But first, let’s consider the company’s background. With annual sales totaling nearly $54 billion, Lockheed Martin is the world’s largest defense contractor. The company receives ~80% of revenues from the U.S. Department of Defense and other agencies, with 20% of sales coming from international customers.
The company consists of four business divisions: Aeronautics, which produces fighter aircraft like the F-35, F-22 and C-130; Rotary & Mission Systems, which produces combat ship and helicopters such as the Sikorsky Aircraft; Missiles & Fire Control, which creates missile defense systems; and Space Systems, which produces satellites. Lockheed Martin has a current market capitalization of nearly $103 billion.
