Can Order Growth Drive Lockheed Martin's (LMT) Q1 Earnings?

Lockheed Martin Corp. (NYSE:LMT) is set to release first-quarter 2018 results on Apr 24, before the opening bell.

In the prior quarter, the company reported a positive earnings surprise of 5.91%. Lockheed Martin has outperformed the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 4.62%.

Let's see how things are shaping up prior to this announcement.

Slew of Contract Wins

Being the largest defense contractor in the United States, Lockheed Martin enjoys a solid inflow of contracts from the Pentagon and its overseas clients, courtesy of its varied defense and military product offerings.

Among the contracts Lockheed Martin won in the first quarter, the significant ones include $3.5 billion deal to offer army training solutions to the U.S Army and $1.5 billion contract for the procurement of spare parts for F-35 lightning II air systems.

Other notable contracts also include a $524 million modification contract for the delivery of Patriot Advanced Capability-3 missiles, a $522 million deal for the production of Trident II (D5) missile and a contract worth $481.2 million to support the construction of four Multi-Mission Surface Combatant ships.

Evidently, such steady flow of orders will certainly boost Lockheed Martin’s quarterly sales. The Zacks Consensus Estimate for first-quarter sales is pegged at $11.3 billion, reflecting year-over-year growth of 2.22%.

Other Factors at Play

In 2017, the company completed the last F-16 production aircraft delivery. So the absence of this product line might weigh on Lockheed’s Aeronautics segment’s revenues in the first quarter. In line with this, the Zacks Consensus Estimate for sales of $4.2 billion for this unit shows a 6% annual decline.

Management at Lockheed Martin expects to deliver higher earnings in 2018, buoyed by lower tax rate, higher segment operating profit and improved FAS/CAS outlook. We believe such year-over-year bottom-line improvement will get reflected in the company’s first-quarter results as well. In line with this, the Zacks Consensus Estimate for first-quarter earnings is pegged at $3.40 per share, reflecting a 13.3% increase year over year.

Lockheed Martin Corporation Price and EPS Surprise

Here are a few companies in the Aerospace-Defense sector that have the right combination of elements to post an earnings beat this quarter.

Boeing (NYSE:BA) is expected to report first-quarter results on Apr 25. The company has an Earnings ESP of +1.70% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

General Dynamics (NYSE:GD) has an Earnings ESP of +0.18% and a Zacks Rank #3. The company is expected to report first-quarter results on Apr 25.

Embraer-Empresa Brasileira de Aeronautica (NYSE:ERJ) has an Earnings ESP of +300.00% and a Zacks Rank #3. The company is slated to release first-quarter results on Apr 27.

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