Lockheed Martin stock price is trading in negative territory this year due to the massive level of devastations the airline industry saw over the past two quarters. Despite substantially lower demand from the passenger airline industry, LMT strongly believes in its future fundamentals and cash generation potential.
This is evident from the latest quarterly dividend increase of 8.3% to $2.40 per share. In addition to the dividend increase, the company also announced to add $1.3 billion to its existing share buyback plan of $3 billion.
Meanwhile, its competitors have been struggling due to lower demand from both commercial and defense industries. This is because of the coronavirus pandemic that has forced governments to place restrictions on traveling. Moreover, the pandemic has also significantly impacted the global economy, forcing government’s to rollback their aggressive defense plans.
Lockheed Martin’s focus towards the defense industry instead of commercial airlines helped it in outperforming the market trends.
New Lockheed Martin CEO Jim Taiclet said, “We might consider “pure-play defense” deals but will not look for bargains in the distressed commercial aerospace industry, which is suffering a collapse in air travel.”
Its robust financial numbers in the latest quarter, as well as better than expected outlook for the full year, has added to investor’s sentiments. The company’s second-quarter revenue of $16.2 billion increased 12% year over year. LMT has also reported a record backlog of almost $150 billion in the latest quarter.
Lockheed stock price soared almost 20% in the last six months and the shares are up close to 40% from March low of $270. Its shares are currently trading around $386, down from the 52-weeks high of $442 a share.
The company has also raised its outlook for 2020. It expects full-year earnings per share in the range of $23.75-$24.05 compared to the previous forecast for $23.65-$23.95. The sales forecast is standing around $63.5 to $65 billion.