Lockheed Martin (LMT) is aerospace and defense company which provides very high-end military equipment. Aircraft is where they particularly shine with the F-35 accounting for about 30% of the company’s revenue.
The lion’s share of the company’s revenue comes the united states government. Most of all aircraft used by the air force comes from this one company.
Lockheed recently announced in 2020 a new CEO to run the company. His name is Jim Taiclet .While having several years of experience with Lockheed, his previous experience as CEO was not with another defense company.
Most of his career was spent running the successful REIT known as American Tower (AMT). The company has been very successful both during and after his tenure. (Which is another great dividend growth company I might add).
The company has a long history of M&A activity and the most recent example of this Aerojet Rocketdyne (AJRD). This is yet another example of the company using its financial fortress of a balance sheet and exemplary cash flows to acquire other businesses.
AJRD is a space and aeronautics company which could potentially extend more deals with NASA and the U.S. government. This was recently announced about six months ago in December 2020 and is likely to finalize in 2021.
LMT is expected to grow top-line revenue numbers 4.50% in 2021 and 3.70% in 2022. Earnings per share for the company in 2020 finished at $24.58. This is expected to grow to $26.68 in 2021 and $27.90 in 2022.
Contracts are usually signed many years in advance. Revenues can be easily forcasted for the next several years due to the timelines of the contracts. Furthermore, innovation is not only encouraged, but expected by shareholders AND the united states military is order for our nation to maintain relevant in terms of weaponry.
New age military equipment is usually pretty “hush-hush” on what is in the works but Lockheed Martin does disclose some of these new products including technologies such as new highly intelligent drones, missile systems, and even targeted lasers.
One thing is for sure, the military will continue come out with bigger and badder weapons. Who will likely be selling it to them? Probably good ole LMT.
Newer acquisitions such as the recent AJRD deal allows Lockheed to also focus on other products in the space category and is another wildcard with some potential.
Almost all revenue comes from one customer (the government). It is steady and consistent but if the government were to fall out of love with Lockheed then this company would be negatively impacted.
There aren’t many who could take down LMTs throne but their main competitor is Boeing. Boeing has the capital and leverage to compete with Lockheed Martin long term.
This company is susceptible to a number of different geopolitical risks. Conflicts with other countries could be both a Negative AND a positive for Lockheed.
The current political climate is leaning harder and harder towards a more relaxed defence budget.