Lockheed Martin (LMT): F-35’s Growth Trajectory Intact—But Are Classified Program Cost Overruns a Persistent Overhang?

$50.00 or $120.00 / year

Lockheed Martin closed FY24 with strong revenue momentum, delivering +5% YoY growth to $71B, driven by sustained backlog conversion across Aeronautics and Missiles & Fire Control (MFC). The company’s book-to-bill ratio remained above 1x for the third consecutive year, expanding backlog to a record $176B (+10%), reinforcing demand durability across F-35 production and missile defense programs. However, Q4 profitability took a hit due to $1.8B in net charges from two classified programs, compressing segment margins to 8.6%. Adjusted for these one-time costs, margins stood at 11.1%, with management guiding for an 11% recovery in FY25, supported by execution on derisked contracts and improving supply chains. MFC remains a key growth driver, with an expected +8% revenue increase in FY25, fueled by JASSM, LRASM, PAC-3, and GMLRS production ramp-ups. Free cash flow (FCF) remains resilient, with FY25 guidance at $6.7B, a +9% YoY increase, as F-35 deliveries rise and capital efficiency improves. Strategic initiatives in AI, autonomy, and digital transformation strengthen Lockheed’s long-term differentiation, with partnerships with NVIDIA, IBM, and Microsoft reinforcing next-gen warfare capabilities. While Lockheed’s scale and backlog ensure stability, cost overruns on classified fixed-price programs raise concerns over margin volatility. Can management’s push for agile acquisition and risk-adjusted pricing successfully contain classified program cost risks?

Table of Contents :
• Stock Rating & Target Price
• Investment Thesis
• Fundamental Models Used
• Company Description
• Corporate Timeline
• Key Metrics (KPI ) and Recently Reported Earnings Review
• Business Highlights, Strategic Announcements & Outlook
• Quarter-over-Quarter (Q-o-Q) and Year-over-Year (Y-o-Y) Growth Analysis
• Key Catalysts Driving Growth
• Historical Financial Statement Analysis & CAGR Trends
• Quarterly Key Financial Ratios and Performance Metrics
• Annual Financial Performance Analysis: Horizontal and Vertical Financial Analysis, Trends
• Financial Forecasts
• Annual Forecasts: Income Statement
• Annual Forecasts: Cash Flow Statements
• Net Debt Levels
• A Closer Look at DCF: Our Assumptions and Methodology
• Terminal Value Calculation
• Target Price Analysis
• Valuation Multiples
• Supplementary Valuation Analysis: Multiples Approach
• Scenario/Sensitivity Analysis – Base Case , Bull Case ,Bear Case
• Holistic Peer Review & Trading Comps: Financial Data, Operational Metrics, and Valuation Multiples
• Implied Price Per Share
• Ownership Activity/ Insider Trades
• Ownership Summary
• An analysis of ESG Risk Rating
• Key Professionals
• Key Board Members
• Key Risks Considerations
• Analyst Ratings
• Analyst Industry Views
• Disclosures

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