Before the opening bell today, Lockheed Martin (LMT) posted second-quarter results that topped analysts’ expectations. According to management, Lockheed Martin benefited from stronger sales of its F-35 jet fighter. Lockheed Martin’s recent acquisition of helicopter maker Sikorsky Corp. also boosted the company’s top line.
Compared with the year ago quarter, revenue climbed 10.9% to $12.91 billion. This beat the $12.56 billion consensus estimate by 2.8%. Over the same period, earnings rose 9.7% to $1.02 billion, or $3.32 per share. Analysts were looking for $2.93 EPS, so Lockheed Martin posted a 13.3% earnings surprise.
Pleased with these results, management lifted its outlook for FY 2016. For the current fiscal year, Lockheed Martin is targeting earnings per share between $12.15 and $12.45, on net sales between $50.0 billion and $51.5 billion. This is above the Street view of $11.84 EPS on $50.46 billion in revenue. This was a solid report, so LMT shares rose after the announcement.
I must also mention that Lockheed Martin is in the process of separating and combining its IT and technical services businesses with Leidos. I consider this deal a positive for Lockheed Martin because it will allow the contractor to focus on its core aerospace and defense businesses. The $5 billion transaction includes a one-time payment of $1.8 billion to Lockheed Martin.
Lockheed Martin is the rare kind of stock that packs a one-two punch: It earns an A-rating in Portfolio Grader, and a B-rating in Dividend Grader. It offers a 2.6% annual dividend yield, and trades at a reasonable 18 times forecasted earnings. For these reasons and more, I currently recommend LMT in my two most conservative premium newsletters: Blue Chip Growth and the Navellier Family Trust.