Headquartered in Bethesda, Maryland, US, Lockheed Martin is a global security and aerospace company founded in 1995 following the merger of Lockheed Corporation with Martin Marietta. It is one of the largest military-industrial companies in the world.
Lockheed Martin sells its products and services through 4 business segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space. The company boasts an enviable product portfolio of over 200 brands and an impressive pipeline.
The early 1990s saw many military-industrial companies pursue mergers to survive a potentially challenging period. With the Cold War over, adaptation was the only path to survival. The 1995 Lockheed Martin merger brought together the 2nd and 3rd biggest military companies at the time, and the newly consolidated company streamlined its operations in the industry. Innovation has driven Lockheed Martin’s bottom line, but it has also pursued inorganic growth to expand its product offering. Some of the company’s most significant acquisitions include COMSAT Corporation, Sikorsky Aircraft, and Aerojet Rocketdyne Holdings. The company’s biggest customer is the US government, accounting for over 70% of its revenues. Over 25% of sales are generated by international customers, most of which are negotiated by the US Government. In recent years, the space industry’s growth promises to be very lucrative for the company. Overreliance on a single customer is always a concern for investors of military-industrial companies. Still, the US has proven to be a willing spender in the industry over the years. Additionally, most contracts are long term, which adds stability to Lockheed Martin’s business.
Lockheed Martin is listed on the NYSE, where it trades under the ticker symbol LMT. The stock is categorized in the Industrials sector, under the Aerospace & Defence industry.
LMT Stock History
Since the 1995 merger, Lockheed Martin has implemented one stock split – a 2-for-1 in December 1998. Stock splits can sometimes signify a good performance in the market. When it undertook the split, the LMT stock price was approaching $100. The stock has since surpassed that price mark, but there have not been any signs of a stock split in recent years.
LMT traded at around $20 at the turn of the millennium. It steadily edged higher and managed to cross above the psychological price of $100 in January 2007. The pressures of the 2007/8 stock market crash triggered a slight dip to around $60 by March 2009, and Lockheed shares remained below $100 until early 2013. After breaching that barrier, the Lockheed stock price picked up upward momentum and sustained a long-term rally that saw its all-time high above $470 in March 2022.
Lockheed Martin is a willing and generous dividend payer when it comes to the Lockheed stock dividend. The company’s stable business has seen it average a dividend yield of over 2.5% in recent years.
How to Trade Lockheed Martin Stock
Here are some of the factors to consider when trading LMT stock:
- Political Issues The US government is the single largest customer of Lockheed Martin. Although there is always an appetite for military spending, the political philosophies of the ruling party can significantly impact the business of the company. Different ruling governments can have different stances on international conflicts and implement policies, such as reduced budgets or higher regulation. In recent years, ruling governments have forced Lockheed Martin to reduce the prices of some of its products.
- International Conflicts
There have been numerous ongoing conflicts worldwide, especially in Europe (Ukraine) and Middle East locations such as Yemen and Syria. There is also a general rise in conflict expectations, which will only coincide with higher military spending. The rising global tensions will inspire positive sentiment toward the LMT stock.
- Economic Conditions
The US government is a willing military spender, but it might be forced to cut its spending on the industry during tough economic times. This can impact the margins of Lockheed Martin, mainly because of the lack of other significant commercial buyers. LMT stock has always been sensitive to underlying economic conditions, and it will tend to grow with the overall economy.
Lockheed Martin operates in a highly competitive industry dominated by small but established players.
Its rivals include Boeing, BAE Systems, Raytheon, and General Dynamics. Competition is based on reputation, innovation and new product rollout, financing options, and customer relations. With the government being the primary customer, LMT stock can also be driven by the number of contracts won or lost.
- Periodic Earnings Reports
The Lockheed Martin fiscal year follows the calendar. The company releases quarterly, semi-annual, and annual earnings reports to update investors on its business health and performance. Some of the metrics to watch out for include revenues, contracts, profits, and long-term debt. Substantial numbers can inspire higher Lockheed share prices, whereas weak figures can lower the stock.
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** Disclaimer –While due research has been undertaken to compile the above content, it remains an informational and educational piece only. None of the content provided constitutes any form of investment advice.