Lockheed Martin Corp. (NYSE:LMT) stock was down 0.93% at the end of the noon hour on October 12. Shares have plunged 6.8% over the past week.
The Pentagon recently grounded Lockheed’s F-35 Jets after an unknown fault caused a pilot to bail on the aircraft in a South Carolina flight. The share price drop has been exacerbated by a global stock market rout that began on Wednesday.
Lockheed stock is still up 1.6% in 2018 so far. U.S. defence contractors have thrived in 2018 on the back of an enormous bump in defence funding. The Trump administration pushed through a 2018 military budget that exceeded the $700-billion mark. Investors can expect this number to grow into the next decade.
In the second quarter Lockheed reported earnings of $4.05 per share which beat estimates. Revenue also surged to $13.4 billion. This caused Lockheed to increase its forecast to $16.75 to $17.05 earnings per share while also projecting full-year revenue between $51.6 billion and $53.1 billion.
The company also expects annual cash flow of $3.3 billion which was up from the previous forecast of $3 billion. Lockheed is expected to release its third-quarter results later this month.
The crash in South Carolina was the first such incident since the aircraft became operational in 2006. Reports indicate that approximately 10 jets at Lockheed’s facility in Fort Worth, Texas have been cleared for flight operations after inspection.
U.S. defence spending and Lockheed’s strong position as the largest defence contractor in the world makes it an attractive long-term hold. Investors should considering buying into the most recent dip.
