Lockheed Martin’s Growing Backlog Enables Strong Revenue Visibility Despite a Few Headwinds

Wide-moat-rated Lockheed Martin reported solid fourth-quarter results as the company continues to navigate through supply chain headwinds and rising demand amid geopolitical turmoil. Lockheed Martin reported $66 billion in 2022 sales (down 2% year over year) and generated a business segment operating margin of 10.9% (down 10 basis points year over year). Management offered 2023 guidance, implying flat sales and modestly lower segment operating margin due to ongoing production bottlenecks and changes in portfolio mix. Nonetheless, geopolitical turmoil stoked an increase in backlog during the year, providing strong order visibility as management expects to return to top-line growth in 2024. We do not anticipate materially changing our $437 per share fair value estimate, though we’ll revisit our modeling assumptions after Lockheed Martin’s 10-K is filed.