Is LMT's Q4 2024 earnings trend a concern?

Lockheed Martin's Q4 2024 earnings trend does not appear to be a significant concern. Here's why:

1. Consistent Financial Performance: Lockheed Martin has demonstrated consistent financial performance with a record backlog of over $165 billion, indicating strong demand across all business areas. The company's book-to-bill ratio stands at 1.3, reflecting a healthy level of new orders relative to sales.
2. Earnings Outlook: Although the company's Q4 EPS was slightly lower than the previous year, with the latest report period ending on December 31, 2024, the EPS growth rate has not been negatively impacted, and the company has raised its full-year EPS outlook to $26.65. This suggests that any decline in Q4 EPS is likely due to one-time factors rather than a fundamental deterioration in the business.

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LMT Total Revenue YoY, Total Revenue

3. Revenue Growth: The company's total revenue for Q4 2024 was $18.62 billion, with a year-over-year growth rate of -1.34%. While this is a decline, it is important to consider the context of the F-35 program delays, which have impacted revenue in previous quarters. The company's revenue outlook for the full year remains strong, with an increased guidance to $71.25 billion.
4. Analyst Confidence: The consensus rating for Lockheed Martin is "Neutral" with an average analyst price target of $524.76, indicating that analysts do not see any immediate concerns. This is further supported by the fact that several brokerages have recently commented on the stock with ratings ranging from "Equal Weight" to "Buy," reflecting a generally positive outlook.
5. Dividend and Shareholder Returns: The company has a history of dividend growth, with a 5% increase in the quarterly dividend to $3.30, marking the 22nd consecutive year of dividend increases. Additionally, the company has a strong track record of returning value to shareholders, with $1.7 billion returned in the form of share repurchases and dividends.
6. Future Prospects: Lockheed Martin is heavily investing in autonomy, AI, and digital technologies, and has successfully demonstrated AI-driven teaming scenarios with drones and ground vehicles. These strategic initiatives are likely to position the company for future growth and maintain its competitive edge in the defense sector.

In conclusion, while there are some challenges, such as F-35 delivery delays and revenue shortfalls, the overall Q4 2024 earnings trend for Lockheed Martin does not appear to be a major concern. The company's strong financial position, consistent growth, and strategic initiatives suggest that it is well-positioned for future success.