Lockheed Martin’s shares rise after first-quarter profit beats estimates (NYSE:LMT)

Lockheed Martin (NYSE:LMT) rose 1.7% in premarket trading Tuesday after the defense contractor reported first-quarter results that were better than Wall Street’s estimates.

The company’s adjusted earnings of $6.33 a share beat the consensus estimate of $5.86 a share.

Sales of $17.2 billion beat the consensus estimate of $16 billion. The first quarter of 2024 included 13 weeks, one more than in the first quarter of 2023. Comparable sales growth was about 5% from a year earlier.

“Our strong start to 2024 demonstrates our continued success designing, developing, and delivering 21st-century security solutions in support of integrated deterrence for customers around the world,” Jim Taiclet, chairman, president and chief executive of Lockheed (LMT), said in a statement. “These first-quarter results reinforce our confidence in our ability to achieve the full-year financial expectations we set in January.”

Management maintained 2024 earnings guidance of $25.65 a share to $26.35 a share, and its sales forecast of $68.5 billion to $70 billion. It expects free cash flow of $6.2 billion for the year.

Sales grew among its business units including jets, missiles, helicopters and space exploration. A loss in a top-secret missile contract cut its margin to roughly 10% from about 16% a year earlier.

The company is working to upgrade the F-35 jet’s hardware and software with what is called Technology Refresh 3, or TR-3. Those updates are expected to boost deliveries of the stealth fighter.

“We remain exceptionally focused on the execution of the F-35 program, working with our customers and suppliers to implement TR-3 capabilities, and are encouraged by the progress towards delivery of the first TR-3 configured aircraft,” Taiclet said. “The innovation and open architecture solutions across our portfolio enable customers worldwide to stay prepared and agile amidst an ever-changing threat environment.”

Lockheed’s (LMT) backlog totaled $159 billion at the end of the quarter, which doesn’t include the Pentagon’s budget requests for fiscal 2025.

As with other defense contractors, Lockheed’s (LMT) results are significantly affected by the Pentagon’s yearly budget, which was capped as part of congressional spending negotiations. The White House proposed to expand defense spending by 1% to $850 billion in 2025.