Posted Fri Oct 15, 05:55 pm ET
The largest U.S. defense contractor, Lockheed Martin Corporation (LMT) in an effort to enhance value for its shareholders, recently hiked its quarterly dividend by 12 cents to 75 cents. This translates to a 19% increase from the prior dividend of 63 cents. The increased dividend will be paid on December 31, 2010, to stockholders of record as on December 1, 2010.
Lockheed Martin’s current annualized dividend yield of around 3.6% is ahead of its nearest peer Northrop Grumman Corporation’s (NOC) annualized dividend yield of around 3%.
The dividend increase does not come as a surprise as this is the eighth consecutive annual increase in Lockheed Martin's quarterly dividend rate. The company has a consistent track record of paying quarterly dividends, supported by its cash position and ability to generate healthy cash flows.
Lockheed Martin has one of the strongest balance sheets among its peers with a low long-term debt-to-capitalization of 57.3% at the end of the first-half of 2010 (Zacks industry average was 93.6%). Lockheed continues to be a strong cash generator with annual operating cash flows touching approximately $3.2 billion during fiscal 2009.
The company closed the first half of 2010 with cash and cash equivalents of $2.7 billion, short-term investments of $877 million and a $1.5 billion revolving credit facility expiring in June 2012. Total long-term debt of approximately $5 billion was mainly in the form of fixed interest bearing securities (notes and debentures).
Lockheed Martin is the largest U.S. defense contractor with a platform-centric focus that guarantees steady inflow of follow-on orders with a leveraged presence in the Army, Air Force, Navy and IT programs.
The company continues to benefit from strong defense spending on a number of its platform programs like the F-35 Lightning II Joint Strike Fighter, the Patriot Advanced Capability-3 (PAC-3), the Advanced Extremely High Frequency (AEHF) satellite, the Littoral Combat Ship (LCS), the Aegis Weapons System for mobile and sea-based missile defense and the Terminal High Altitude Area Defense (THAAD) system.
Lockheed announced encouraging second quarter 2010 financial results, with earnings of $1.96 per share. The company’s revenues in the most recent quarter increased 3.3% year over year to $11.4 billion. For fiscal 2010, the company guided revenues in the $45.5 billion – $46.5 billion range and earnings of $7.15 – $7.35 per share. The Zacks Consensus Estimates for 2010 and 2011 are $7.24 and $7.46, respectively.
Lockheed’s customer base includes the U.S. government, foreign governments and other commercial buyers. Profitability at Lockheed is largely contingent on defense spending and its contracts from various defense departments. We believe the company will continue to benefit from higher defense outlays going forward.
We presently have a Zacks #4 Rank (short-term Sell recommendation) on the stock. We also maintain our Neutral recommendation on Lockheed Martin. |
发表于 2010-10-17 01:24
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