Lockheed Martin (NYSE: LMT) is the largest defense contractor in the United States. Despite the advantages of size and scale, the aerospace giant has been struggling as of late.
After reaching a yearly high of $614.61 in October of 2024, Lockheed stock entered a prolonged downturn. By mid-December, the company’s market cap had shrunk by $30 billion.
At present, LMT stock is effectively trading at the same levels it did in mid-March of 2024 — after prices dropped another 8.9% from $503.69 on January 27 to $458.46 by press time on January 29.
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Quite a few factors are at play here. Last quarter, lower-than-expected revenue on account of F-35 delivery delays shook investor confidence.
In addition, Lockheed is facing significant headwinds from Elon Musk and the Department of Government Efficiency — as one of the largest defense contractors, the business is a prime target for budget cuts — and Musk appears to have a particular bone to pick with the F-35 program.
The aforementioned 8.9% single-day drop came about as a result of all of this — but most importantly, on January 28, Lockheed Martin released its Q4 and full year 2024 earnings report — and investors are far from satisfied.
Lockheed shares plummet on disappointing earnings
For the quarter ended December 31, 2024, the aerospace titan recorded earnings per share (EPS) of just $2.22 — severely underperforming consensus estimates of $6.62. On top of that, revenues, which came in at $18.6 billion, fell short of analyst expectations at $18.84 billion.
EPS was a sore spot — in Q4 of 2023, Lockheed posted an EPS of $7.58. While the 70% decline in this crucial metric sticks out, it isn’t quite as bad as it appears at first glance.
A closer look at the earnings report reveals that the defense company suffered a $1.7 billion pre-tax loss on classified programs. Once this one-time loss is accounted for, Lockheed stock provided EPS that works out to $6.67 — a hair above analyst estimates.
While the pullback might appear concerning, it could just as likely constitute a buying opportunity. LMT shares have received plenty of congressional buys in the last quarter of 2024, and the company maintains an extensive $176 billion backlog, which suggests continued demand and reliable revenue going forward.
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