Defense contractor Lockheed Martin saw its stock jump almost 9 percent after delivering solid third-quarter earnings results Tuesday in its largest post-earnings jump in a decade.
Governments are now thinking “that it’s worthwhile to have an effective missile defense capacity in your country,” Lockheed CEO Jim Taiclet said in April after the company had reported a drop in quarterly sales and profits. “Especially when you see missiles hitting hospitals and situations like that, and train stations in Ukraine.”
In its third quarter 2022 earnings call, Greg Gardner, Lockheed’s vice president of investor relations, said “increased volume in our classified programs at Skunk Works also contributed to the growth.”
Skunk Works is an official pseudonym for Lockheed’s Advanced Development Programs, which is on a mission “to build the world’s most experimental aircraft and breakthrough technologies in abject secrecy at a pace impossible to rival.”
Lockheed Martin was trading at $438.13 as of this writing on Oct. 19 after trading as low as $389 on Oct. 14.
“Good news,” tweeted journalist Michael Tracey. “Growth driven by projections about the long-term profitability of the Ukraine war.”
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The war business is extremely profitable because governments are willing to spend anything to win, Eric Zuesse wrote for Modern Diplomacy. “In a fully (or nearly fully) capitalist country such as the U.S. and its allies, the people who control the decisions are actually private investors, and profits are their main (or only) objective. So, the controlling investors in ‘defense’ firms hire agents (including politicians) in order to control each of their main markets, which are their own country.”
An investigative historian, Zuesse wrote the book “AMERICA’S EMPIRE OF EVIL: Hitler’s Posthumous Victory, and Why the Social Sciences Need to Change.”
Some of the biggest U.S. defense contractors are making more money than ever from classified military and intelligence programs, top executives from Northrop Grumman and Raytheon told investors in early 2020. At the time, competition with China and Russia was driving a wave of secret spending one analyst called “unprecedented in recent history.”
There was more to this week’s Lockheed stock price jump than earnings, Barrons reported. Lockheed doubled its planned repurchase of shares for 2022 from $4 billion to about $8 billion. The company also plans to buy $4 billion of its stock a year in 2023 and 2024. All that spending will reduce the share count, which will boost per-share earnings. And Lockheed will add debt to its balance sheet to buy some of that stock back.
After a series of missteps, Lockheed is back on track, according to The Motley Fool. Lockheed investors had a tough time in 2021 with the stock underperforming as the company underwent a transition. Many mature programs aged off the books and new, potentially lucrative ones were still in the pre-revenue stage.
“Lockheed Martin has a backlog of $140 billion in future orders and dominant positions in Pentagon priority areas, including hypersonic missiles,” Lou Whiteman wrote for The Motley Fool.