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Last update on 2024-06-05

Lockheed Martin (LMT) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Explore Lockheed Martin's 2023 Piotroski F-Score Analysis. With a final score of 6/9, discover detailed insights on profitability, liquidity, and operating efficiency.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 6

We're running Lockheed Martin (LMT) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

The Piotroski F-Score assesses a company's financial strength based on 9 criteria. Lockheed Martin (LMT) has been evaluated and scored a 6 out of 9, reflecting its sound financial health. The analysis reveals robust profitability with consistent net income and positive cash flow, both current and historical. ROA has grown, showing better asset use. However, there was a slight decline in current ratio and gross margin, indicating potential liquidity and efficiency concerns. An improvement in asset turnover and consistent share buybacks indicate efficient operations and strong shareholder value focus.

Insights for Value Investors Seeking Stable Income

Lockheed Martin (LMT) appears to be a solid investment choice based on its Piotroski score of 6. Although there are minor concerns with liquidity and efficiency, the company's profitability, positive cash flows, and commitment to improving shareholder value through buybacks are promising. Investors should look into these potential weaknesses deeper but generally, LMT's strong financial indicators make it worth considering.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Lockheed Martin (LMT)

Company has a positive net income?

One important factor in Piotroski Analysis is the net income of a company. This criterion checks whether the company has generated a profit or a loss. A positive net income translates to one point.

Historical Net Income of Lockheed Martin (LMT)

Based on the data for Lockheed Martin (LMT), the net income for 2023 stands at $6.92 billion. Not only is this figure positive, but it also signifies a substantial profit for the company. Consequently, for this criterion, Lockheed Martin secures one point. Further examination of the company's net income trajectory over the past 20 years reveals a consistent upward trend. In 2003, the net income was approximately $1.05 billion, with subsequent years showcasing an overall growth pattern, barring occasional dips. For instance, from 2007 to 2017, net income grew from $3.03 billion to $5.3 billion, reflecting strong financial health and stability. More recently, despite a minor dip in 2021 ($5.73 billion), the company has rebounded with higher net income figures. This consistent profitability makes Lockheed Martin an attractive investment from a Piotroski perspective.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is the amount of cash generated by a company's regular business operations. It is crucial as it indicates whether a company can generate sufficient cash flow to maintain and grow its operations.

Historical Operating Cash Flow of Lockheed Martin (LMT)

For Lockheed Martin (LMT), the CFO in 2023 is $7,920,000,000, which is positive. Thus, according to the Piotroski Analyses, this criterion adds 1 point to the company's score. Historically, the CFO data over the past 20 years show a consistent positive trend, with a notable increase from $1,809,000,000 in 2003 to $7,920,000,000 in 2023. This demonstrates robust operational efficiency and the ability to generate ample cash from core activities, which is favorable for investors and indicates financial health and effective management.

Return on Assets (ROA) are growing?

The Return on Assets (ROA) measures a company's effectiveness in using its assets to generate earnings. Comparing ROA year-over-year helps evaluate if the company's profitability is improving.

Historical change in Return on Assets (ROA) of Lockheed Martin (LMT)

Lockheed Martin's ROA has increased from 0.1105 in 2022 to 0.1314 in 2023, indicating improved efficiency in utilizing its assets. This 0.0209 uptick reflects positively on the company's profitability. Additionally, while LMT's 2023 ROA is below the industry median of 0.2484, this improvement is a strong step towards closing the gap. Hence, under Piotroski's criteria, Lockheed Martin would earn 1 point for this increase in ROA.

Operating Cashflow are higher than Netincome?

Operating cash flow higher than net income implies a company's core business generates sufficient cash flow. It's important because it suggests solid, reliable performance, reflecting efficient operations.

Historical accruals of Lockheed Martin (LMT)

With an operating cash flow of $7,920 million and a net income of $6,920 million in 2023, Lockheed Martin shows that its primary business activities are generating more cash than the net earnings reported. This is a positive trend, as strong operating cash flow relative to net income is a sign of good earnings quality and financial health. Historically, the company's operating cash flow has generally been in sync with or exceeded its net income, which adds credibility to its reported earnings. Given the numbers for 2023, this criterion scores 1 point.

Liquidity of Lockheed Martin (LMT)

Leverage is declining?

Explain the criterion for Lockheed Martin (LMT) and why it is important to consider

Historical leverage of Lockheed Martin (LMT)

Analyzing leverage trends is crucial for evaluating a company's financial health and risk profile. Leverage, in the common terminology, refers to the amount of debt a company uses to finance its assets. Higher leverage means more debt compared to equity, which could indicate financial risk. However, it can also imply efficient capital usage if managed properly. Leverage ratio is key for understanding how a company finances its operations and how capable it is of meeting its debt obligations.

Current Ratio is growing?

Current Ratio compares a company's current assets to its current liabilities and is a measure of a company's liquidity and short-term financial health.

Historical Current Ratio of Lockheed Martin (LMT)

Lockheed Martin's (LMT) Current Ratio in 2023 stands at 1.2116, a slight decline from 1.3213 in 2022. This trend of decreasing Current Ratio indicates a potentially reduced ability to cover short-term liabilities with short-term assets, which can be considered unfavorable. Over the last 20 years, LMT has experienced fluctuating current ratios, with a noticeable peak at 1.4157 in 2021 and the current decline. Compared to the industry's median current ratio of 2.1805 in 2023, LMT's current ratio indicates that the company may face more challenges in meeting short-term liabilities compared to its industry peers. Furthermore, the company's current ratio remains consistently below the industry median, showing a potential area for improvement in liquidity management.

Number of shares not diluted?

Change in Shares Outstanding tells us if the company is buying back its own shares. If a company reduces the number of its outstanding shares, it is often a sign of confidence in its own financial health.

Historical outstanding shares of Lockheed Martin (LMT)

The Outstanding Shares decreased from 263,700,000 in 2022 to 250,300,000 in 2023. Thus, we can add 1 point in our Piotroski analysis. Over the last 20 years, there has been a consistent reduction in the number of shares outstanding, from 450,000,000 in 2003 to 250,300,000 in 2023, indicating an aggressive share buyback policy. This trend is favorable as it signifies that the company maintains strong financial stability and is committed to enhancing shareholder value through consistent buybacks. Share buybacks also increase earnings per share (EPS) by distributing profits over a reduced number of shares.

Operating of Lockheed Martin (LMT)

Cross Margin is growing?

Gross margin represents the percentage of revenue that exceeds the cost of goods sold (COGS). It's crucial for assessing the efficiency and profitability of a company.

Historical gross margin of Lockheed Martin (LMT)

For Lockheed Martin (LMT), the gross margin in 2023 is 0.1255, which is marginally decreased from the 2022 gross margin of 0.1256. Despite being a slight decline, it demonstrates a decrease in efficiency and profitability year-over-year. Historically, LMT's gross margins have been notably lower than the industry median, indicating that LMT operates under tighter margins compared to its peers. In 2023, the industry median gross margin stands at 0.2484, which is approximately double that of LMT. This trend indicates a persistent challenge for LMT to match up to the industry standards. Therefore, based on this criterion of Piotroski Analysis, LMT does not add a point for the gross margin assessment.

Asset Turnover Ratio is growing?

Asset Turnover is a financial ratio that measures the efficiency of a company in using its assets to generate revenue.

Historical asset turnover ratio of Lockheed Martin (LMT)

In 2023, Lockheed Martin's Asset Turnover ratio is 1.283, an increase compared to 1.2719 in 2022. This upward trend signifies improved efficiency in using assets to generate revenue, indicative of better operational performance. Historical data over the last 20 years shows variation, peaking at 1.4648 in 2007 and hitting lows near 1.0703 in 2015. The recent increase is a positive indicator, adding 1 point for the Piotroski score.


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