Lockheed Martin Corporation (LMT) in North Bethesda, Md., is a global security and aerospace company that specializes in the research, design, development, manufacturing, integration, and maintenance of high technology systems, products, and services.

LMT's dividend pay-outs have grown at a 9.4% CAGR over the past five years and 8.9% over the past three years. While its four-year average dividend yield is 2.6%, its current dividend translates to a 2.9% yield. It declared a $2.80 per share quarterly dividend on Jan. 27, 2022, payable on March 03, 2022. The stock has gained 15.5% in price over the past year and 16% over the past three months to close Friday's trading session at $389.33.

In addition, given the company's robust fundamental strength and favorable analyst sentiments based on solid growth attributes, we think the stock should continue to generate strong momentum.

Here is what could shape LMT's performance in the near term:

Positive Developments

Last month, LMT announced that the LMXT strategic tanker aircraft would be built in Mobile, Alabama, and Marietta, Georgia. Introduced in September 2021, the LMXT is LMT's offering for the U.S. Air Force's KC-Y "Bridge Tanker" Program competition.

Also last month, LMT, Amazon Inc. (AMZN), and Cisco Systems Inc. (CSCO) collaborated to incorporate novel human-machine interface technologies into NASA's Orion ship, allowing future astronauts to explore how far-field speech technology, AI, and tablet-based video communication may help them.

Robust Financials

During the fourth quarter, ended Dec. 31, 2021, LMT's net sales increased 4.1% year-over-year to $17.7 billion. Its operating income increased 7.3% year-over-year to $2.45 billion. The company's net income grew 14.3% from the year-ago value to $2.04 billion, while its EPS grew 17.1% from the prior-year quarter to $7.47.

Strong Profitability

LMT's 9.42% trailing-12-months net income margin is 45.9% higher than the 6.5% industry average. Also, its ROC, levered FCF margin, and ROA are 251.7%, 40%, and 140.6% higher than the respective industry averages. Furthermore, its $9.22 billion in cash from operations is 4331.04% higher than the $208.10 million industry average.

Consensus Rating and Price Target Indicate Potential Upside

Of  13 Wall Street analysts that rated LMT, five rated it Buy, and eight rated it Hold. The 12-month median price target of $411.23 indicates a 5.6% potential upside. The price targets range from a low of $350.00 to a high of $450.00.

POWR Ratings Reflect Solid Prospects

LMT has an overall B grade, which equates to a Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. LMT has a B grade for Quality and Stability. LMT's solid earnings are consistent with the Quality grade. In addition, the stock's 0.85 beta is in sync with the Stability grade.

Of the 74 stocks in the Air/Defense Services industry, LMT is ranked #3.

Beyond what I stated above, we have graded LMT for Sentiment, Growth, Value, and Momentum. Get all LMT ratings here.

Bottom Line

LMT has exhibited robust financial performance and offers stable dividend yields. With the company's recent collaboration with AMZN and CSCO, it is well-positioned to witness solid growth in the coming months. Furthermore, it is expected to benefit from rising demand across its diversified business segments. So, we believe it could be wise to scoop up its shares now.

How Does Lockheed Martin Corporation (LMT) Stack Up Against its Peers?

While LMT has a B rating in our proprietary rating system, one might want to consider looking at its industry peers, Elbit Systems Ltd. (ESLT), Moog Inc. (MOG.A), Brady Corporation (BRC), which have an A (Strong Buy) or a B (Buy) rating.

LMT shares were trading at $390.43 per share on Monday morning, up $1.10 (+0.28%). Year-to-date, LMT has gained 9.85%, versus a -5.46% rise in the benchmark S&P 500 index during the same period.

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.

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