Why Is Lockheed Martin Stock Higher?

why is Lockheed Martin stock higher

Lockheed Martin stock (NYSE: LMT) is surging over 6% today (Tuesday) intraday. And this confirms the bullish outlook we've maintained on the Lockheed Martin stock price.

Lockheed Martin stock's share bump is from its stellar third-quarter earnings report, which it posted today.

Lockheed's net sales for the quarter grew to $2.4 billion, up from $865 million from Q3 2015. The defense giant also posted adjusted earnings per share of $3.61, which smashed analysts' consensus estimate of $2.89 per share, according to FactSet.

Another reason LMT is rising today: The company boosted its quarterly dividend 10% to $1.82 per share. It also increased share repurchases to $2 billion.

Looking forward, Lockheed raised its guidance for the end of 2016. It now expects earnings of $12.10 per share with revenue of $46.5 billion. Those numbers are $0.95 per share and $1.5 billion higher than its previous guidance estimate, respectively.

Lockheed credits its outstanding performance in Q3 to the finalized sale of its information systems and global solutions business. The company has been trying to remold its business as it leans more on its profitable work in building helicopters, missiles, and military jets. As a result, the company has divested its big government information technology unit and merged it with Leidos Holdings Inc. (NYSE: SAI).

Investors are pleased with Lockheed's renewed focus on its lucrative military segment, and we can't argue.

And that's not the only reason we're bullish on Lockheed Martin stock today...

Why Lockheed Martin Stock Is a Strong Investment for the Long Term


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Lockheed Martin is tapped into one of the biggest "unstoppable trends" of all time: War, Terrorism, and Ugliness, according to Money Morning Chief Investment Strategist Keith Fitz-Gerald.

Fitz-Gerald, who has more than 30 years of professional investing experience, targets so-called unstoppable trends when choosing his best long-term investments. These are trends that - no matter what - will continue to persist for years to come...

Unfortunately, war is one of those. And Lockheed makes must-have products that militaries around the world are clamoring for...

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Take Lockheed's new F-35 fighter jet, for instance. The company currently has a whopping $400 billion contact with the Pentagon to produce at least 2,400 of these high-tech jets.

Or how about Lockheed's new acquisition of Sikorsky Aircraft, which will allow it to produce the most advanced helicopters on the market. Right now, in fact, Lockheed is working with its Sikorsky segment to produce new vertical take-off and landing technology called Aerial Reconfigurable Embedded System (ARES). The ARES vehicle is completely unmanned and can carry huge payloads - including whole vehicles - and troops. The vehicle is highly nimble and modular. And you can bet - once it's finally developed - that the United States and its allies will be eager to grab ARES contracts, just like the F-35.

These two programs (and there are plenty more like them) give Lockheed ample room to grow in the future. What's more, Lockheed's decision to shed its IT business and focus on its military segment plays right into its strengths. The defense industry is where the money is, and as an investor, that's where you want to be, too.

Based on the average estimate of 21 analysts, Lockheed stock has a price target of $262 by December of this year, up around 6% from its current price of $247 per share, according to FactSet. LMT is already up 13% year to date.

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