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Date of Investment

April 21, 2021

Price Target


Invested or Exited?


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Lockheed Martin


Company Information

Lockheed Martin is an American aerospace, arms, defense, security, and advanced technologies company.

Headquartered in Bethesda, Maryland, this company is a public, multinational corporation that contracts domestic

and international customers. The focus of Lockheed Martin is on aeronautics, missiles and fire control, rotary and

missions systems, as well as space. The company has very secure contracts with both the Pentagon and NASA, and

is one of the top defense contractors in the world.

Executive Summary

Investment Thesis: 

Lockheed Martin is an American company that specializes in aerospace, arms, defense, security, space, and other advanced technologies. Lockheed Martin is currently

trading at levels much lower than other similar companies in the industry by multiple metrics, and as such appears undervalued. At the same time, much of its revenue historically has come

from the American government, a trend that does not appear likely to change. Additionally, it offers a solid dividend, and presents the club with a good opportunity.

Investment Merits: 

Low Valuation, Strong Dividend - the company’s dividend is about 40% of its annual earnings, which is very

strong and allows the company to continue incremental dividend increases as earnings grow. Additionally, the

company repurchases shares at a decent value, and accelerates repurchasing in times of market weakness

depending on share valuations.

Record Sales - In 2020, Lockheed Martin reported record sales in all business areas, indicating that despite the hit

production of their F-35 jets has been inhibited by the Covid-19 pandemic

Space Exploration and Tourism - in the market, space exploration and tourism have become big investment

themes, and LMT is likely to be a major participant in this developing industry

Investment Risks: 

Debt to equity ratio high, but on the decline - LMT’s net debt is only 0.90x its EBITDA . Its EBIT covers its interest expense 15x over. LMT grew its EBIT by 15% last year, making its debt load easier to handle

Concerns about the F-35 jet rollout - Covid-19 concerns remain a threat to most companies, but Lockheed’s growth in revenue in all areas of its business is an indicator that the impacted rollout of its main product are not hurting the company severely

Federal Budget Discussions - Defense contractor equities are often volatile at these times, as defense spending may decrease

Covid’s impact on international supply lines - Will LMT have to spend more to get the same materials

Political considerations - The market generally expects less defense spending under Democratic administrations. However, this may already be priced in.


Buy and hold, Lockheed Martin will provide steady returns for years to come.

Industry Group Analysts

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