Let’s talk about the popular Lockheed Martin Corporation (NYSE:LMT). The company’s shares saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $358.6 and falling to the lows of $305.7. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Lockheed Martin’s current trading price of $319.3 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Lockheed Martin’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Lockheed Martin
What is Lockheed Martin worth?
Lockheed Martin appears to be overvalued by 23% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$319.30 on the market compared to my intrinsic value of $260.06. This means that the buying opportunity has probably disappeared for now. Furthermore, Lockheed Martin’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
Can we expect growth from Lockheed Martin?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Lockheed Martin’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? LMT’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe LMT should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on LMT for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for LMT, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Lockheed Martin. You can find everything you need to know about Lockheed Martin in the latest infographic research report. If you are no longer interested in Lockheed Martin, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.