Lockheed Martin Yields 2.6% and Trades at 17.6 Times Earnings. Is Wall Street Right to Be Cautious on the Stock ?
Yahoo Finance ·
Given Wall Street's usual optimism, the three buy ratings, six hold ratings, and one sell rating (from Goldman Sachs ), according to Visible Alpha, indicate a cautious view of Lockheed Martin ( LMT +1.08% ) stock. That may surprise many investors, given the company's attractive valuation, all-time-high backlog of $230 billion in the second quarter (almost three times its estimated 2026 sales), and surging global defense budgets. I'll cut to the chase here. I think the caution is justified for three key reasons: A combination of increasing complexity and government demands, notably from the U.S. government, is placing stress on fixed-price development programs, bringing about significant charges and cost overruns for defense companies in recent years. In common with Boeing 's ( BA -0.79% ) defense business, Lockheed Martin has relatively high exposure to these sorts of developmental programs (classified missile and aeronautics programs and the F-35 fighter serve as examples) when compared to, say, RTX ( RTX +0.29% ) , which has relatively more solutions based on repeatable production such as Tomahawk missiles, PAC-3 missile segment enhancement, and advanced medium-range air-to-air missiles (AMRAAMs). Defense budgets may have surged, but so has government debt, and real questions remain about where global defense budgets can go from here.
DYAX Investor Sentiment
Bullish (Long) 69% · Bearish (Short) 31%
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