Defense stocks like Lockheed Martin stock (NYSE:LMT), and stocks tied to national defense are becoming more appealing. Not only is there a protracted war in Ukraine reducing global inventories of weaponry and ammunition, but the industry also supplies some defensive capabilities.
Government contracts not only sustain the underlying firms, but they also offer a high barrier to entry and inflation protection. Lockheed Martin stock (NYSE:LMT) is emerging as a top pick among the group owing to its price and yield. The stock is selling at a low 14.88X earnings, which is in line with the overall market but the lowest among large-cap rivals.
Lockheed Martin Stock Provides Both Value And Yield
Raytheon Technologies stock (NYSE:RTX) is the most comparable in terms of value, although it pays a substantially smaller dividend. The 2.6% yield on RTX is as safe as any in the business, but it is roughly 50 basis points lower than Lockheed Martin, which likewise has a strong forecast for dividend growth. General Dynamics (NYSE:GD) and Northrup Gruman (NYSE:NOC) have the highest valuations in the group, trading at 18X and 19X earnings, respectively, but their dividends are much lower. GD and NOC give the lowest yields in the group, at 2.2% and 1.5%, respectively, while NOC’s return looks the safest among a group of safe payments. With a 40% payout ratio, a 9% CAGR, and 19 years of straight distribution increases, Lockheed Martin’s dividend statistics are exemplary for the group.
Market Analysis of Lockheed Martin Stock
This year’s analyst coverage of Lockheed Martin stock (NYSE:LMT) has been uneven, but the lesson is clear: analysts are holding this stock and driving up share prices. Despite one downgrade, two price target decreases, and two began coverages with a Peer/Underperform rating, the stock’s price target continues to increase. The price target has risen in the last 12, 3, and 1-month comparisons and may rise more in the next quarter.
Regarding analyst predictions, Lockheed Martin stock (NYSE:LMT) produced an excellent but mixed quarter. The corporation recorded $16.58 billion in net sales, a 3.4% increase over the previous year, with growth in all areas. Aeronautics led the way with a 7.9% rise, followed by an 8% increase in Space, a 1.8% increase in Missiles & Fire Control, and a 5% fall in Rotary & Mission Systems. The bad news is that sales fell short of analyst expectations by 65 basis points, although margin strength compensated for the shortfall.
Share repurchases enhance the adjusted EPS throughout the fiscal year. These amount to around $4 billion, or about 3.5% of the market value, and there is also a new $14 billion buyback authorization in place, representing about 13.5% of the market cap. The corporation intends to repurchase up to $4 billion in shares in the current quarter, Q4, and will continue to do so during the following fiscal year.
Featured Image- Unsplash @ John Torcasio
Author Okoro Chinedu 
