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록히드마틴(LMT)은 3분기 실적 쇼크로 주가가 11.8% 급락했지만 펀더멘털 대비 과도한 하락으로 보고 추가 매수한 상태이며, 목표가 400~420달러를 제시함 [핵심 주장 및 근거] - 마이클 버리가 3분기 13F에서 록히드마틴을 신규 매수해 포트폴리오 2위 종목이 됨 - 주가는 2021년 이후 꾸준히 상승했으나 최근 횡보 중이며 현재가 약 340달러 - 3분기 실적에서 매출 가이던스가 하향(67~69→67)되었으나 변화폭은 작다고 평가 [사업 및 해자] - 방산 공급업체로 NATO 및 미국 정부 계약이 장기간(예: F-35 계약 2070년까지) 이어져 성장 예측성이 높음 - 매출의 약 70%가 미국 정부에서 발생, 경기 민감도가 낮음 - 자기자본이익률·자산회전율 등 품질 지표가 경쟁사 대비 최고 수준 [밸류에이션] - EV/EBITDA 13.9 등 동종 업계 대비 가장 저렴한 수준 - DCF: 할인율 7.1%, 장기성장률 2%로 적정가 약 403달러(약 18% 상승여력) - 주당순이익(EPS) 기반 목표가 약 397달러, 과거 5년 평균 PER 16.7 적용 [리스크] - 국방 예산 삭감 가능성(현재 매우 낮다고 판단) - 아프가니스탄 철수 후 미사일 수요 감소 가능성 - 공급망 이슈, 대규모 자본지출(capex) 증가로 인한 성장 둔화 가능성 - PER이 현 수준(13.9)에 머물 경우 상승여력은 약 4%로 축소 [결론 및 전망] - 목표가 400~420달러(현재가 대비 약 21% 상승), 지정학적 긴장 고조 시 추가 상승 여지 - 배당수익률 약 3%로 기다리는 동안 수익 보전 가능 - 포트폴리오 내 최대 비중은 아니며 주가 2배 상승 시 매도 계획
다듬은 글
hey everybody and welcome back to h invests uh i know that a lot of my fellow investors on youtube uh have shares in lockheed martin learn to invest it's a big part of his portfolio j money as well and mine and it came out in the news only yesterday that when the q3 um f3130f filings came out michael bury the big short legend has also initiated a position in lockheed martin and it's not just a position it's quite a large position if we take a look at the full breakdown of his portfolio from whale wisdom you can actually see that lockheed martin is the second largest position in his portfolio uh which is quite significant you know like look um michael berry had a lot of these like speculative puts in his portfolio and now all of a sudden he's got lockheed martin which she didn't have in his portfolio before um and in fact if you look at kind of uh if you go into data roma and have a look at the profile of all of the super investors that have all recently filed for their 13 fs you see lockheed martin uh as number two now i appreciate the super investors aren't buying a lot this quarter but you could see lockheed martin has three buys nonetheless um that is skews quite a lot like this overall position thing is skewed quite a lot by the fact that michael bury added such a large position in lockheed martin to his portfolio but at the end of the day uh for a quarter where super investors aren't buying it's quite significant to see lockheed martin up at number two so let's have a look at lockheed martin share price history you can see here the the graph and the graph has been very very consistent like over the past decade you're seeing very very consistent capital gain growth and very consistent um turnover growth and free cash flow growth from this company but you can see it's been a bit of a rocky ride in the past few years which is interesting and if you look at the uh lockheed martin's pre-covered high that's up at 4 30.
we had the market sell off there was a bit of a recovery up to 400 but then it's been trading sideways which is quite interesting like given this historic trend uh so i've been invested in lockheed martin since january 2021 that was when i first started the youtube channel uh and these little things you can see here in green uh that's when i kind of added to my position i sold off a little bit uh when it got to 390 because it was approaching my price target but now the shares have gone back down so today we're exploring is this a good time and is this a good price to buy more um right so let's have a quick chat about lockheed martin fears because you may have noticed from that last graph that lockheed martin hasn't had a particularly good month right look at this you see a very very sharp sell-off on one day and yes that day was lockheed martin's q3 results uh you can see here article from cnbc lockheed martin shares of the defense contractor tumbled 11.8 after it reported a quarterly revenue miss and lowered its expectations for next year 11.8 that is significant particularly on a company with revenues relatively stable um that already looks like it was a relatively good deal so let's have a look at these um revenue misses so you can see the guidance this is basically what did it and like in my opinion i know it's a changing guidance to the downside but it looks relatively small right so you've got sales previous outlook you know 67 to 69 now we're looking at 67 right uh the operating profit is just missing the low end of that uh pension exactly the same diluted dps is actually beating the previous guidance and cash of operations yeah there has been a bit of a decline there but does this slight change in revenue cash flow eps guidance warrant that 12 decline and now are the shares good value that's the question that we need to be asking here um also is lockheed martin a good business right i always go through this in a lot of detail and i've done a video on this previously i rewatched that video this morning and i realized that most of what is in that video it still stands so if you want a deep dive on the full qualitative side of lockheed martin have a look at that video it talks about the defense contracts and everything in there in really really good detail the link will be in the description uh but just the key points if you want to go through it three four minute summary so lockheed martin a high quality aerospace and defense supplier and they basically supply all kinds of military things for the governments of nato those kind of countries right um the growth is like mid single digit it's pretty consistent because most of these contracts are for the long term right this this airplane that you can see in the thumbnail that's an f-35 right the contract with the us government the lockheed martin has for the f-35 is going on to 2070 so it's relatively easy to predict this growth and that it's so consistent that's why you saw a slow and consistent share price increase and it's a bit weird that we're now trading sideways um non-cyclical business as well so it's defense right it's it's something that doesn't vary too much with economic cycles occasionally you might see the governments cut their budget a little bit but seventy percent of lockheed martin's revenue comes from the us right and who loves spending on defense more than the us government right pretty much nobody apart from mainly china which only gives the u.s even more reason to keep spending on their defense budget uh economic moats so yeah lockheed martin have a very very wide economic moat because they have really really deep ties with the government you know they say can you adjust this on the on the f35 bam bam uh it's kind of a monopsony type business and i don't see any kind of catalyst for that wide moat to be erosive away soon uh the risks the the key ones would be if we see a cut in defense spending which hasn't happened uh for about seven years and we haven't seen a major cuts for a long time for decades uh so that risk is very very low as i said a lot of these contracts are rolled out for decades and decades to come so that gives a lot of support to lockheed martin's revenue um one risk is obviously we've got no afghanistan anymore like lockheed martin they make a lot of missiles for the us department of defense um and like yeah the work of the number of missiles that they're going to be asking is obviously going to decline uh if the us aren't actively involved in a war um but who knows like jib on the flip side geopolitical tensions might rise again uh like china taiwan is an example and we could see that demand from the us government to lockheed martin go back up there's also supply chain issues which has been a massive issue across the board in 2021 and it's a good dividend paying stock right they've been increasing their dividends for a long long time and it's currently yielding about three percent uh and fully covered uh by earnings and free cash flow i believe in the range of 1.5 to 1.8 times so that's really really good so our lockheed martin under values that's what we're going to explore now i hope you guys enjoy right so the first thing we're looking at is lockheed martin versus the aerospace and defense sector so what i did is i set up a filter and i filtered it by all companies listed in the us that are classified under aerospace and defense with a market cap of more than 10 billion so these are kind of the mature um companies that have big revenues from the us government uh that have been you know in this monopoly for a long time uh and you can see lockheed martin here so this is sorted by market cap they're the third largest after raytheon and boeing um so okay firstly we got it into growth quality and value right so if we look at the growth section first uh lockheed martin's annualized five-year turnover growth is looking pretty good um what is that fourth highest in the bunch so yeah they're looking pretty good in terms of past performance the forecasted turnover growth for the next three years is a lot slower we can see it's annualized at 1.6 which is low you can see it's quite low from some of these other contractors but look lockheed martin is definitely forecasted to grow much slower than some of these other contractors right so that is definitely something to look at in the valuation and we're going to have to use very very conservative growth rates to get an accurate fair value for lockheed martin stock um ebitda okay these these ones are both passed you can see ebitda change and free cash flow change um are pretty much the same as turnover a change so lockheed martin's margins have been relatively consistent if we now look at quality though lockheed martin appears to be a very very high quality right so return on invested capital which is a very very important metric in this sector lockheed martin is the highest of any of its competitors which is amazing um an ebit margin they also have very very good margins and when you see high return on investor capital and high return on ebit margin it's a really really good sign that the business has a wide economic moats the other thing to consider is they have the highest asset turnover by a long long way so what the asset turnover measures is it looks at all of the businesses assets and it sees how much turnover it can generate with those assets so what this means is lockheed martin is using his assets very very efficiently uh to generate turnover so it looks very very good on the quality space um definitely one of the highest uh quality defense contractors out there but if we look at it on the valley perspective it has um by far the lowest ev ebitda of the bunch right the next one is 15.1 so lockheed martin is looking cheapest by a long long margin uh and pe the same with pe right 13.9 pe and the same with ev to free cash flow it's got an ev to free cash flow of 18.
so that's very very interesting to see is it like lucky martin yes it's growing quite slowly uh forecasted in the future we're gonna look at that in the dcf but it's massively high quality but then it's also looking very cheap on a valley perspective so on the whole when we're comparing lockheed martin to his competitors it looks like it's in pretty good stead so here is our discounted cash flow analysis for lockheed martin uh first thing to note is you can see the cash flow growing steadily over time which is really really good you did have this weird year in 2018 where the free cash flow was really really low uh but the good news is it was nothing to do with the business operationally it was just that it benefited them for them to pay down their pension account because of donald trump's tax cuts that's all it was and you can see the free cash flow recovers quite a lot in 2019 and it's much higher than what it was in 2017 so that is a massive massive positive um yes you can see the consistent growth and then you can see the analyst estimates in the future there is some growth but it's slower growth so similar as to what we saw when we were comparing the industry um we're seeing slower growth going forward at least projected than what we saw in the past and if we average these out we get 1.82 and then if we do kind of like the compounding calculation oops if we do the compounding calculation we get 1.8 so it's looking like this is what the analysts kind of think which is kind of consistent with what the annualized turnover forecast set at 1.6 so you can see if you put in these free cash flow estimates uh you've got your discount so lockheed martin is 88 debt and 12 equity um and the interest rate on corporate debt is about four percent on average um and it's got a lower beta than average as well as i mentioned it's relatively non-cyclical so you would expect a beta below one uh when you put this into whack but this this cam rate comes out at 7.1 percent which i would say for someone like lockheed martin like they're pretty low risk right as i already mentioned so 7.1 discount rate i'm happy to use uh and then i'm doing a 2 long run growth rate i would normally do 2.5 but because they're growing slightly slower i chose two instead um and what you can see here is when you put all of that in it gives us an intrinsic value of 403 dollars a share which is 18 upside on the current share price of 340 so that's pretty good like that is pretty good that's pretty consistent like it's not massive massive massive upside but it's good upside particularly for a low-risk business like lockheed martin where you can say these cash flows are accurate with a relatively high degree of confidence because those defense contracts are kind of set up for decades and decades if we go down here and we kind of have a look at it at different scenarios well we can see this matrix is saying okay the free cash flow is going to grow between zero and six percent a year at different discount rates anything from six percent discount rate to ten percent discount rate and what i've said is i've said okay seven percent discount um that i think that's fair for lockheed martin let's not vary with discount rate anymore and then anything from zero to four percent growth like if we were being really really bearish we'll say okay lucky martin is not going to grow any more at all uh and then you set the long run growth to zero as well um but if they're growing if they grow it too that's kind of like the fair case because that's what the analysts are suggesting and then say if we have heightened political uh tensions uh if the demand for military uh goes up then we can say okay the ball scenario is four percent and what you can see is the bear case says it's over values but not by a massive margin right so like even the bear case if there's no growth at seven percent discount that's still three hundred dollars a share so the downside wouldn't be that much on a share price of 340 right only 12 downside uh at the fair case we're getting 441 uh which is really really good uh and then the ball case is massive the ball case is 533.58 i don't think we're gonna see four percent growth every year uh if kind of things with lockheed martin stay as they are but as i said if we do see high in geopolitical tensions like china taiwan or something else uh and the us has to step in we could very quickly see the free cash flow growth for keep martin going up and going up at much higher than two percent so that's very positive to see uh on the whole the dcf looks pretty good if we turn to earnings per share now so what we're doing is looking at the forecasted earnings per share uh trying to figure out what kind of price to earnings would put on rocky martin and then multiplying the two together to get a target price so that is exactly what we're doing i would just say ignore what i've got for whack here exactly we're going to set this to 7.1 exactly what it was before yeah okay that's perfect so we can see the next three years we've got earnings per share growth and these are the forecasts from the average analyst which i actually put down here if you look down here towards the bottom right you can see there's quite a high sample of analysts with a relatively narrow range so what that does is it gives me quite a high degree of confidence for using these earnings per share estimates um you can see the growth again if we kind of average that growth out it's higher than the turnover growth which is quite interesting uh so the analysts think that the eps growth is going to be better than the free cash flow growth maybe that's because lockheed martin they're kind of going through a business transformation at the moment they mention this in their q3 report and that might be resulting in higher capex so their earnings per share operating cash flow is still going to grow much quicker but they might be having to spend on high cap eggs to like find new sources of growth in the future so that's why we might see earnings per share growing at four or five percent and then free cash flow growing at two percent um so yeah and then kind of the average pe over the past five years again bearing in mind this kind of weird tax pension year we had we're getting an average of 16.7 so these earnings per share they're being discounted at seven percent a year um multiplying that by 16.7 these are the kind of target prices we're getting so next year it'd be 417 uh and then it kind of gets slightly worse because obviously it's growing at five percent but the discount rate is seven percent so in the real the real target price is going to be slightly lower so down to 383 uh by financial year 23 but when your average is out you're getting an average target price of 397 which is very very similar to what we've got on the dcf and it gives us 17 upside on the current share price which is pretty good and as i said if you look at the average uh analysts again we have a good sample size here like i ideally i like the sample size to be closer to 20 um but it's a decent sample size nonetheless right and there's a relatively low like interval between the low and the high uh this gives me relatively good confidence like the only risk with this eps model here is that like the current pe is 13.9 right and if the current p is 13.9 if this stays at 13.9 if we put 13.9 in here we're then getting the shares at like four percent upside compared to 17 right so that's the risk is that like if they don't go back up to their like long run multiple of 17 then we're not going to see that much upside but again like there's limited downside here because this price of earnings of 14 is the lowest that they've been in five years and even then it's still showing that the shares are undervalued even if it's only at a four percent margin so that's something very very positive to look at okay guys so in conclusion am i buying lmt so i've already bought uh as i think i mentioned at the start of the video i've bought it and i think that it's a good deal so if we have a quick look at the graph i bought some more after the q3 so my whole conclusion from this is i thought the shares were already quite a good deal after this like massive q3 uh drop off i would have started prepping to sell them when they got into the 400s but then the shares went down to 330 and like i put in all the new um like guidance into these models and the shares look cheap right i don't think that that um slightly negative q3 report warranted a 12 drop when the shares were already looking really good so just a couple of key points obviously i think lockheed martin is a very very high quality business they've been doing a great job of what they do for absolute decades they've got a great relationship with the us government really good ceo uh james tastelet uh and yeah they're a really really good business with a wide economic moat based off the valuations that we looked at my target price will be around 400 to 420 400 if things kind of stay where they are uh 420 or maybe even slightly higher if we see a rise in geopolitical tensions and we think that biden is going to increase defense spending uh going forward and that represents about 21 upside on the current share price of 340 so that's great news um and the risk will glow and as i said a lot of potential upside if geopolitical tensions escalate i appreciate that this kind of investment like the um the kind of payoff is like you have a relatively high probability of making a good 20 25 that's the way i see it like lockheed martin it would never be like the biggest position in my portfolio just because i'm really looking to grow my portfolio and i know that it's very unlikely that lockheed martin's share price will double and if it doubles then i'm gonna start selling it right i'm gonna start selling the shares because then i think there'll be other values but i do like the limited downside i do like the dividends lockheed martin has passed all of my very strict dividend filters so that three percent yield is sustainable and it is nice to have that three percent yield whilst you wait for the shares to reach fair value so i think lockheed martin's a good deal but please let me know what you think in the comments i hope you guys enjoyed the video and i'll see you next time
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