Lockheed Martin stock falls after mixed quarterly results

Lokcheed Martin (LMT.US) is one of the main contractors for advanced weapons and mission systems for the US military and allies. The company is involved in both the civil and military development of the space industry, within NASA and the US Space Force. Lockheed published its financial results for Q1 2022 before the start of today's session:

Net sales: $ 15.0 billion in Q1 2022 vs $ 16.3 billion in Q1 2021 (approximately 8% decrease)

Net profit: $ 1.73 billion in Q1 2022 / $ 6.44 per share (above analyst expectations at $ 6.11) compared to $ 1.84 billion / $ 6.56 per share in Q1 2021

Free cash flow: $ 1.1 billion in Q1 2022 vs $ 1.5 billion in Q1 2021.

Operating cash: $ 1.4 billion in Q1 2022 vs $ 1.7 billion in Q1 2021

• Some investors expected better results due to the outbreak of the war in Ukraine, therefore stock prices moved slightly lower on Tuesday. 
• Supply chains disruptions remain a problem, which can effectively stop the production of advanced weapon systems;
• The company's management board will hold talks with the Pentagon regarding the acceleration of additional weapons production for Ukraine in connection with the upcoming large clash in Donbas. According to CFO Jay Malve, the production will not have an additional impact on the company's financial results;
• The company maintains positive forecasts for 2022 and estimates the total value of sales at approximately USD 66 billion. The war in Ukraine did not start until the end of February 2022, which means that the results for the current quarter may not be reliable in the face of escalation of global tensions in the following quarters;
• The company's management cooled down the expectations of investors by saying that the sale of Black Hawk helicopters or F-35 fighters to allied armies 'will last for years' and will not be immediately reflected in profits. Lockheed's management probably knows the production capabilities of its own factories well.
• The overall tone of the report remains positive for the company's long-term stockholders. A few hundred percent increase in revenues in the largest American defense companies is currently an unlikely scenario due to logistical constraints, and it is difficult to compare it with the situation on the vaccine market in 2020.

"Lockheed Martin had a solid start to the year by delivering margin expansion and free cash flow above our expectations despite recent Covid-surge impacts on our operations and supply chain. We remain confident in our guidance for the remainder of the year and our growth outlook beyond," said Lockheed Martin Chairman, President and CEO James Taiclet.

"Global events this quarter marked a dramatic change in the geopolitical environment and demonstrated the tremendous importance of an effective deterrent to aggression by major nation-states, and mutual defense among the United States and its allies. The men and women of Lockheed Martin are fully dedicated to enhancing this deterrence capability by effectively delivering on our existing platform programs and systems, while accelerating the integration of digital world technologies to enable true Joint All Domain Operations for our customers."

Lockheed Martin (LMT.US), interval D1. The company's stock is trading in an upward trend that accelerated at the end of February due to the outbreak of the war in Ukraine. The key resistance is located around $475.00. One can observe that a double-high pattern may be forming, which may encourage buyers to hold back on potential purchases. Source: xStation5