LMT
Lockheed Martin Corporation
$513.52
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Overvalued
Trading 5.1% above fair value
You pay
$513.52
Bear
$385.80
Fair
$488.68
Bull
$591.56
Bear
$385.80
-24.9%
$22.60 × 18x + net cash
Fair
$488.68
-4.8%
$22.60 × 22x + net cash
Bull
$591.56
+15.2%
$22.60 × 26x + net cash
Key Value Driver
Through-cycle normalized EPS ($22.60)
Implied Market Multiple
22.7x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $627.10 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $488.68 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Wall Street's average price target is $627.10 (from 37 analysts). Our estimate is 32% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing