In this quarter, Lockheed Martin (LMT) encountered excessive costs and charges, which led them to fall short of projected results. This means that they didn’t meet expectations as a defense contractor.
Investors were disappointed, sending Lockheed shares down more than 5% as of 10:30 ET Tuesday.
Charges eat into results
Lockheed Martin, known as the world’s leading defense contractor, is currently experiencing tough times. The company responsible for the production of the F-35, various helicopters, missiles, and space systems, has been left out of significant recent contracts, such as the new fighter jet program that was granted to Boeing. As a result, Lockheed Martin’s shares have decreased by approximately 14% from their annual high.
The company’s most recent financial performance isn’t doing much to change its current trend. Lockheed Martins’ Q3 earnings were $1.46 per share, with revenues totaling $18.2 billion, which fell short of the predicted earnings of $6.52 per share and revenues of $18.6 billion by analysts on Wall Street.
The earnings figure appears to be inflated due to significant losses from certain programs, notably a $950 million setback on a top-secret aerospace project. If we exclude these charges, the earnings per share would’ve been approximately $7.29 instead.
In my observation, Lockheed Martin’s free cash flow fell short as they utilized approximately $150 million, contrary to the projected $1.2 billion inflow. This discrepancy was due to the delivery of F-35 aircraft being slower than anticipated.
Is Lockheed Martin stock a buy?
The majority of the charges were one-time expenses, however, it seems that there is no indication for investors that things will get better anytime quickly. Unfortunately, Lockheed’s book-to-bill ratio, which compares future business to current-quarter revenue, was weak at 0.8x, and none of the company’s four segments generated more business in the quarter than what they invoiced.
Lockheed Martin continues to be a dominant player in the industry, promising fresh prospects in the future. However, at present, investors might need to settle for a 3% dividend return as Lockheed navigates through these challenging circumstances.
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2025-07-22 19:26