Intrinsic value of Lockheed Martin - LMT

Previous Close

$325.23

  Intrinsic Value

$116.61

stock screener

  Rating & Target

str. sell

-64%

Previous close

$325.23

 
Intrinsic value

$116.61

 
Up/down potential

-64%

 
Rating

str. sell

We calculate the intrinsic value of LMT stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 93.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
  5.16
  5.14
Revenue, $m
  55,132
  59,377
  63,789
  68,373
  73,138
  78,090
  83,240
  88,596
  94,170
  99,973
  106,017
  112,316
  118,884
  125,735
  132,884
  140,349
  148,147
  156,295
  164,814
  173,723
  183,042
  192,795
  203,005
  213,695
  224,891
  236,620
  248,909
  261,789
  275,289
  289,443
Variable operating expenses, $m
  47,958
  51,538
  55,259
  59,126
  63,144
  67,321
  71,664
  76,182
  80,883
  85,777
  89,414
  94,727
  100,266
  106,043
  112,073
  118,369
  124,946
  131,818
  139,003
  146,516
  154,376
  162,602
  171,212
  180,228
  189,671
  199,563
  209,928
  220,791
  232,177
  244,114
Fixed operating expenses, $m
  1,010
  1,032
  1,055
  1,078
  1,102
  1,126
  1,151
  1,176
  1,202
  1,228
  1,255
  1,283
  1,311
  1,340
  1,369
  1,399
  1,430
  1,462
  1,494
  1,527
  1,560
  1,595
  1,630
  1,666
  1,702
  1,740
  1,778
  1,817
  1,857
  1,898
Total operating expenses, $m
  48,968
  52,570
  56,314
  60,204
  64,246
  68,447
  72,815
  77,358
  82,085
  87,005
  90,669
  96,010
  101,577
  107,383
  113,442
  119,768
  126,376
  133,280
  140,497
  148,043
  155,936
  164,197
  172,842
  181,894
  191,373
  201,303
  211,706
  222,608
  234,034
  246,012
Operating income, $m
  6,164
  6,807
  7,475
  8,170
  8,892
  9,643
  10,425
  11,239
  12,086
  12,968
  15,348
  16,307
  17,307
  18,351
  19,441
  20,580
  21,771
  23,015
  24,317
  25,680
  27,106
  28,599
  30,162
  31,801
  33,517
  35,317
  37,203
  39,181
  41,256
  43,431
EBITDA, $m
  9,824
  10,636
  11,480
  12,358
  13,271
  14,220
  15,207
  16,234
  17,303
  18,417
  19,578
  20,788
  22,051
  23,368
  24,743
  26,180
  27,682
  29,252
  30,893
  32,611
  34,409
  36,291
  38,262
  40,327
  42,491
  44,758
  47,135
  49,627
  52,240
  54,980
Interest expense (income), $m
  0
  770
  664
  852
  1,047
  1,250
  1,461
  1,681
  1,909
  2,146
  2,393
  2,650
  2,918
  3,197
  3,488
  3,792
  4,108
  4,439
  4,784
  5,145
  5,523
  5,918
  6,330
  6,763
  7,215
  7,688
  8,184
  8,704
  9,249
  9,819
  10,417
Earnings before tax, $m
  5,394
  6,143
  6,623
  7,122
  7,642
  8,182
  8,744
  9,330
  9,939
  10,575
  12,698
  13,389
  14,110
  14,863
  15,650
  16,472
  17,332
  18,231
  19,172
  20,157
  21,188
  22,268
  23,400
  24,586
  25,829
  27,132
  28,499
  29,933
  31,436
  33,014
Tax expense, $m
  1,456
  1,659
  1,788
  1,923
  2,063
  2,209
  2,361
  2,519
  2,684
  2,855
  3,428
  3,615
  3,810
  4,013
  4,225
  4,447
  4,680
  4,922
  5,176
  5,442
  5,721
  6,012
  6,318
  6,638
  6,974
  7,326
  7,695
  8,082
  8,488
  8,914
Net income, $m
  3,937
  4,484
  4,835
  5,199
  5,578
  5,973
  6,383
  6,811
  7,256
  7,720
  9,269
  9,774
  10,300
  10,850
  11,424
  12,025
  12,652
  13,309
  13,995
  14,714
  15,467
  16,256
  17,082
  17,948
  18,855
  19,807
  20,804
  21,851
  22,949
  24,100

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  50,257
  54,127
  58,148
  62,327
  66,671
  71,185
  75,879
  80,762
  85,843
  91,133
  96,643
  102,385
  108,372
  114,617
  121,134
  127,939
  135,047
  142,475
  150,241
  158,361
  166,857
  175,748
  185,054
  194,799
  205,005
  215,697
  226,900
  238,641
  250,947
  263,849
Adjusted assets (=assets-cash), $m
  50,257
  54,127
  58,148
  62,327
  66,671
  71,185
  75,879
  80,762
  85,843
  91,133
  96,643
  102,385
  108,372
  114,617
  121,134
  127,939
  135,047
  142,475
  150,241
  158,361
  166,857
  175,748
  185,054
  194,799
  205,005
  215,697
  226,900
  238,641
  250,947
  263,849
Revenue / Adjusted assets
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
Average production assets, $m
  21,998
  23,691
  25,452
  27,281
  29,182
  31,158
  33,213
  35,350
  37,574
  39,889
  42,301
  44,814
  47,435
  50,168
  53,021
  55,999
  59,111
  62,362
  65,761
  69,315
  73,034
  76,925
  80,999
  85,264
  89,731
  94,411
  99,315
  104,454
  109,840
  115,488
Working capital, $m
  -4,025
  -4,335
  -4,657
  -4,991
  -5,339
  -5,701
  -6,076
  -6,468
  -6,874
  -7,298
  -7,739
  -8,199
  -8,679
  -9,179
  -9,701
  -10,245
  -10,815
  -11,410
  -12,031
  -12,682
  -13,362
  -14,074
  -14,819
  -15,600
  -16,417
  -17,273
  -18,170
  -19,111
  -20,096
  -21,129
Total debt, $m
  12,290
  15,773
  19,392
  23,154
  27,063
  31,126
  35,350
  39,745
  44,318
  49,079
  54,038
  59,205
  64,594
  70,214
  76,080
  82,204
  88,602
  95,287
  102,276
  109,584
  117,230
  125,232
  133,608
  142,378
  151,564
  161,186
  171,269
  181,836
  192,912
  204,523
Total liabilities, $m
  45,231
  48,714
  52,333
  56,095
  60,004
  64,067
  68,291
  72,686
  77,259
  82,020
  86,979
  92,146
  97,535
  103,155
  109,021
  115,145
  121,543
  128,228
  135,217
  142,525
  150,171
  158,173
  166,549
  175,319
  184,505
  194,127
  204,210
  214,777
  225,853
  237,464
Total equity, $m
  5,026
  5,413
  5,815
  6,233
  6,667
  7,119
  7,588
  8,076
  8,584
  9,113
  9,664
  10,238
  10,837
  11,462
  12,113
  12,794
  13,505
  14,248
  15,024
  15,836
  16,686
  17,575
  18,505
  19,480
  20,501
  21,570
  22,690
  23,864
  25,095
  26,385
Total liabilities and equity, $m
  50,257
  54,127
  58,148
  62,328
  66,671
  71,186
  75,879
  80,762
  85,843
  91,133
  96,643
  102,384
  108,372
  114,617
  121,134
  127,939
  135,048
  142,476
  150,241
  158,361
  166,857
  175,748
  185,054
  194,799
  205,006
  215,697
  226,900
  238,641
  250,948
  263,849
Debt-to-equity ratio
  2.450
  2.910
  3.340
  3.710
  4.060
  4.370
  4.660
  4.920
  5.160
  5.390
  5.590
  5.780
  5.960
  6.130
  6.280
  6.430
  6.560
  6.690
  6.810
  6.920
  7.030
  7.130
  7.220
  7.310
  7.390
  7.470
  7.550
  7.620
  7.690
  7.750
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,937
  4,484
  4,835
  5,199
  5,578
  5,973
  6,383
  6,811
  7,256
  7,720
  9,269
  9,774
  10,300
  10,850
  11,424
  12,025
  12,652
  13,309
  13,995
  14,714
  15,467
  16,256
  17,082
  17,948
  18,855
  19,807
  20,804
  21,851
  22,949
  24,100
Depreciation, amort., depletion, $m
  3,660
  3,830
  4,006
  4,188
  4,379
  4,576
  4,782
  4,995
  5,218
  5,449
  4,230
  4,481
  4,743
  5,017
  5,302
  5,600
  5,911
  6,236
  6,576
  6,932
  7,303
  7,693
  8,100
  8,526
  8,973
  9,441
  9,931
  10,445
  10,984
  11,549
Funds from operations, $m
  7,598
  8,314
  8,840
  9,388
  9,957
  10,549
  11,165
  11,806
  12,474
  13,169
  13,499
  14,255
  15,044
  15,867
  16,726
  17,625
  18,563
  19,545
  20,572
  21,646
  22,771
  23,948
  25,182
  26,474
  27,828
  29,248
  30,736
  32,296
  33,933
  35,649
Change in working capital, $m
  -298
  -310
  -322
  -335
  -348
  -362
  -376
  -391
  -407
  -424
  -441
  -460
  -479
  -500
  -522
  -545
  -569
  -595
  -622
  -650
  -680
  -712
  -745
  -780
  -817
  -856
  -897
  -940
  -986
  -1,033
Cash from operations, $m
  7,896
  8,624
  9,162
  9,722
  10,305
  10,911
  11,541
  12,197
  12,880
  13,593
  13,941
  14,715
  15,523
  16,367
  17,248
  18,169
  19,132
  20,140
  21,193
  22,296
  23,451
  24,660
  25,927
  27,254
  28,646
  30,104
  31,633
  33,236
  34,918
  36,682
Maintenance CAPEX, $m
  -2,039
  -2,200
  -2,369
  -2,545
  -2,728
  -2,918
  -3,116
  -3,321
  -3,535
  -3,757
  -3,989
  -4,230
  -4,481
  -4,743
  -5,017
  -5,302
  -5,600
  -5,911
  -6,236
  -6,576
  -6,932
  -7,303
  -7,693
  -8,100
  -8,526
  -8,973
  -9,441
  -9,931
  -10,445
  -10,984
New CAPEX, $m
  -1,605
  -1,694
  -1,760
  -1,829
  -1,901
  -1,976
  -2,055
  -2,137
  -2,224
  -2,315
  -2,412
  -2,513
  -2,620
  -2,733
  -2,853
  -2,979
  -3,111
  -3,251
  -3,399
  -3,555
  -3,719
  -3,891
  -4,074
  -4,265
  -4,467
  -4,680
  -4,904
  -5,139
  -5,387
  -5,647
Cash from investing activities, $m
  -3,644
  -3,894
  -4,129
  -4,374
  -4,629
  -4,894
  -5,171
  -5,458
  -5,759
  -6,072
  -6,401
  -6,743
  -7,101
  -7,476
  -7,870
  -8,281
  -8,711
  -9,162
  -9,635
  -10,131
  -10,651
  -11,194
  -11,767
  -12,365
  -12,993
  -13,653
  -14,345
  -15,070
  -15,832
  -16,631
Free cash flow, $m
  4,251
  4,730
  5,033
  5,348
  5,676
  6,016
  6,370
  6,739
  7,121
  7,520
  7,540
  7,972
  8,421
  8,890
  9,379
  9,889
  10,421
  10,977
  11,558
  12,166
  12,801
  13,465
  14,161
  14,889
  15,652
  16,451
  17,288
  18,166
  19,086
  20,051
Issuance/(repayment) of debt, $m
  -1,973
  3,483
  3,619
  3,761
  3,909
  4,063
  4,225
  4,394
  4,573
  4,761
  4,959
  5,168
  5,388
  5,620
  5,866
  6,124
  6,397
  6,685
  6,989
  7,309
  7,646
  8,002
  8,376
  8,770
  9,185
  9,623
  10,083
  10,567
  11,076
  11,612
Issuance/(repurchase) of shares, $m
  1,771
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -202
  3,483
  3,619
  3,761
  3,909
  4,063
  4,225
  4,394
  4,573
  4,761
  4,959
  5,168
  5,388
  5,620
  5,866
  6,124
  6,397
  6,685
  6,989
  7,309
  7,646
  8,002
  8,376
  8,770
  9,185
  9,623
  10,083
  10,567
  11,076
  11,612
Total cash flow (excl. dividends), $m
  4,050
  8,213
  8,652
  9,109
  9,585
  10,079
  10,595
  11,133
  11,694
  12,281
  12,499
  13,139
  13,809
  14,511
  15,245
  16,013
  16,819
  17,663
  18,547
  19,474
  20,447
  21,467
  22,537
  23,660
  24,838
  26,074
  27,371
  28,733
  30,162
  31,663
Retained Cash Flow (-), $m
  -5,709
  -387
  -402
  -418
  -434
  -451
  -469
  -488
  -508
  -529
  -551
  -574
  -599
  -624
  -652
  -680
  -711
  -743
  -777
  -812
  -850
  -889
  -931
  -974
  -1,021
  -1,069
  -1,120
  -1,174
  -1,231
  -1,290
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  153
  165
  178
  191
  205
  219
  234
  250
  266
  283
  300
  318
  337
  357
  377
  399
  421
  444
  469
  494
  521
  549
  578
  609
  641
  675
  710
  747
  785
  826
Cash available for distribution, $m
  -1,659
  7,826
  8,250
  8,691
  9,150
  9,628
  10,126
  10,645
  11,186
  11,752
  11,948
  12,565
  13,211
  13,886
  14,593
  15,333
  16,108
  16,920
  17,771
  18,662
  19,597
  20,578
  21,606
  22,685
  23,817
  25,004
  26,251
  27,559
  28,931
  30,372
Discount rate, %
  7.50
  7.88
  8.27
  8.68
  9.12
  9.57
  10.05
  10.55
  11.08
  11.63
  12.22
  12.83
  13.47
  14.14
  14.85
  15.59
  16.37
  17.19
  18.05
  18.95
  19.90
  20.89
  21.94
  23.04
  24.19
  25.40
  26.67
  28.00
  29.40
  30.87
PV of cash for distribution, $m
  -1,543
  6,725
  6,501
  6,230
  5,915
  5,563
  5,179
  4,771
  4,344
  3,909
  3,363
  2,953
  2,556
  2,179
  1,829
  1,509
  1,224
  974
  759
  580
  434
  317
  226
  157
  106
  70
  44
  27
  16
  9
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Lockheed Martin Corporation is a security and aerospace company. The Company operates through four segments. Aeronautics segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies. Missiles and Fire Control segment provides air and missile defense systems; fire control systems; manned and unmanned ground vehicles, and energy management solutions. Rotary and Mission Systems segment provides design, manufacture, service and support for a range of military and civil helicopters; mission systems and sensors for rotary and fixed-wing aircraft; simulation and training services, and unmanned systems and technologies, among others. Space Systems segment is engaged in the research and development, design, engineering and production of satellites, strategic and defensive missile systems and space transportation systems.

FINANCIAL RATIOS  of  Lockheed Martin (LMT)

Valuation Ratios
P/E Ratio 17.7
Price to Sales 2
Price to Book 62.2
Price to Tangible Book
Price to Cash Flow 18.1
Price to Free Cash Flow 22.8
Growth Rates
Sales Growth Rate 16.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 13.2%
Cap. Spend. - 3 Yr. Gr. Rate 4.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 945.2%
Total Debt to Equity 945.2%
Interest Coverage 0
Management Effectiveness
Return On Assets 10.9%
Ret/ On Assets - 3 Yr. Avg. 9.7%
Return On Total Capital 31.1%
Ret/ On T. Cap. - 3 Yr. Avg. 30.7%
Return On Equity 230.1%
Return On Equity - 3 Yr. Avg. 142.7%
Asset Turnover 1
Profitability Ratios
Gross Margin 10.7%
Gross Margin - 3 Yr. Avg. 11.2%
EBITDA Margin 12.9%
EBITDA Margin - 3 Yr. Avg. 13.4%
Operating Margin 11.7%
Oper. Margin - 3 Yr. Avg. 12%
Pre-Tax Margin 10.3%
Pre-Tax Margin - 3 Yr. Avg. 10.9%
Net Profit Margin 11.2%
Net Profit Margin - 3 Yr. Avg. 9.7%
Effective Tax Rate 23.2%
Eff/ Tax Rate - 3 Yr. Avg. 27%
Payout Ratio 38.6%

LMT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LMT stock intrinsic value calculation we used $51048 million for the last fiscal year's total revenue generated by Lockheed Martin. The default revenue input number comes from 2017 income statement of Lockheed Martin. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our LMT stock valuation model: a) initial revenue growth rate of 8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.5%, whose default value for LMT is calculated based on our internal credit rating of Lockheed Martin, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Lockheed Martin.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of LMT stock the variable cost ratio is equal to 87.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $988 million in the base year in the intrinsic value calculation for LMT stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Lockheed Martin.

Corporate tax rate of 27% is the nominal tax rate for Lockheed Martin. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the LMT stock is equal to 0.3%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for LMT are equal to 39.9%.

Life of production assets of 10 years is the average useful life of capital assets used in Lockheed Martin operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for LMT is equal to -7.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-683 million for Lockheed Martin - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 287 million for Lockheed Martin is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Lockheed Martin at the current share price and the inputted number of shares is $93.3 billion.

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COMPANY NEWS

▶ How China steals U.S. secrets   [Aug-18-18 08:40AM  Yahoo Finance]
▶ Lockheed Martin's $1.4B missile contract may fire up more Orlando work   [Aug-17-18 04:21PM  American City Business Journals]
▶ Boeing is buying small-satellite maker Millennium Space Systems   [Aug-16-18 03:01PM  American City Business Journals]
▶ Boeing acquisition to expand Arlington-based space and defense business   [02:03PM  American City Business Journals]
▶ F-35 work helps Globe Engineering grow in Wichita   [Aug-15-18 03:45PM  American City Business Journals]
▶ Nearly $1B distributed to DFW defense contractors in last 2 weeks   [07:38AM  American City Business Journals]
▶ How Spirit AeroSystems pay compares to other public aerospace companies   [03:23PM  American City Business Journals]
▶ Lockheed Martin nabs another hypersonic weapons contract   [02:30PM  American City Business Journals]
▶ Space Force could sputter but Greater Washington companies see chance for liftoff   [Aug-10-18 03:03PM  American City Business Journals]
▶ What Are the Top U.S. Exports?   [Aug-08-18 11:55AM  Investopedia]
▶ Inside the list: A closer look at C. Fla.'s MS&T industry   [10:27AM  American City Business Journals]
▶ Is Now the Time to Buy L-3?   [08:05AM  Motley Fool]
▶ Correction: PepsiCo-CEO-Women-Glance story   [Aug-07-18 06:57PM  Associated Press]
▶ Lockheed venture arm increases investment in maker of tiny satellites   [08:32AM  American City Business Journals]
▶ SpaceX Is Poised To Beat Boeing To This Milestone; 'Like Flying The iPhone'   [Aug-03-18 04:01PM  Investor's Business Daily]
▶ Bank deal will lead to new name for Chastain Park Amphitheatre   [05:30AM  American City Business Journals]
▶ An Investor's Primer on the Defense Sector   [Aug-02-18 04:50PM  Motley Fool]
▶ Lockheed Martin Deploys Augmented Reality for Spacecraft Manufacturing   [Aug-01-18 04:40PM  The Wall Street Journal]
▶ Flying trials: Lockheed Martin lands contracts worth $65.6M   [03:27PM  American City Business Journals]
▶ Prominent executive donates largest one-time financial gift to UA in school's history   [Jul-31-18 08:54AM  American City Business Journals]
▶ 4 local defense firms win $1B+ in contracts   [Jul-30-18 11:35AM  American City Business Journals]
▶ What Lockheed and Northrop earnings reveal about our geopolitical world today   [Jul-25-18 07:35PM  American City Business Journals]
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