There are a lot of pretty-looking, multi-year stock charts out there, yet the one for aerospace and defense company Lockheed Martin (LMT 347.58, +2.68, +0.8%) would rank near the top of any pretty-looking list.
Shares of LMT have been rising steadily since early 2013 when they traded just under $90 per share. Today, they are crossing close to $350 per share following the company's solid fourth quarter report and full-year 2018 outlook.
The numbers speak for themselves, and what they say is Lockheed Martin is being managed well in a strong spending environment for aerospace and defense.
To begin, net sales of $15.1 billion in the fourth quarter were up 10.0% year-over-year. The fourth quarter blended revenue growth rate for S&P 500 companies is currently 7.0%, according to FactSet.
The sales increase was driven by the Aeronautics (+12%), Rotary and Mission Systems (+14%), and Missiles and Fire Control (+31%) business segments. The Space segment (-12%) was the only division that failed to deliver a year-over-year sales increase as it saw a reduction in launch-related events. Even so, the Space segment still managed to expand its operating margin by 20 basis points to 9.4%.
The total business segment operating profit margin increased 40 basis points to 9.8% while Lockheed Martin's consolidated operating profit margin jumped 190 basis points year-over-year to 12.3%.
Higher sales and increased operating efficiency flowed right down to the company's bottom line. On an adjusted basis, which excludes a net one-time $1.9 billion charge, substantially all of which was non-cash and primarily related to the Tax Act, Lockheed Martin reported earnings from continuing operations of $4.30 per share, up 32% from the same period a year ago.
For the full-year, Lockheed Martin recorded net sales of $51.0 billion, up 8.0% year-over-year, and adjusted earnings from continuing operations of $13.33 per share, up 7.7% from 2016.
The solid earnings growth helped drive a 25% increase in cash from operations, which totaled $6.48 billion and provided an opportunity to repurchase 7.1 million shares and increase its dividend payments 10% to $2.2 billion.
The company's current outlook for 2018 calls for net sales in the range of $50.0 billion to $51.5 billion, consolidated operating profit margin to be between 13.3% and 14.0%, and GAAP diluted earnings per share to be $15.20 to $15.50. Cash from operations will be greater than, or equal, to $3.0 billion.
At its current price, LMT trades at approximately 22.7x estimated 2018 earnings, which are anticipated to be up 15% year-over-year at the midpoint of the guidance range. That translates to a price-to-earnings growth ratio of 1.5 for 2018 compared to 1.5 for Northrop Grumman (NOC 337.23, +1.67, +0.5%) and 1.8 for Boeing (BA 341.09, -2.13, -0.6%) based on current earnings estimates.
Including today's gain, LMT is up 8.3% year-to-date and up 37.1% over the last 52 weeks.