LMT
Lockheed Martin Corporation
$533.24
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Overvalued
Trading 8.6% above fair value
You pay
$533.24
Bear
$387.70
Fair
$491.08
Bull
$594.47
Bear
$387.70
-27.3%
$22.60 × 18x + net cash
Fair
$491.08
-7.9%
$22.60 × 22x + net cash
Bull
$594.47
+11.5%
$22.60 × 26x + net cash
Key Value Driver
Through-cycle normalized EPS ($22.60)
Implied Market Multiple
23.6x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $635.11 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $491.08 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 $635.11 (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