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Lockheed Martin: Module 3

Lockheed Martin: Module 3. Devin Sheehan. Lockheed Martin Background. Aeronautics (31.69% of Sales) F-22 Raptor, C-130 Hercules, U-2 Spy Plane Information Systems and Global Solutions (18.75% of Sales) Cyber Security and Battlefield Intel Missiles and Fire Control (15.80% of Sales)

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Lockheed Martin: Module 3

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  1. Lockheed Martin: Module 3 Devin Sheehan

  2. Lockheed Martin Background • Aeronautics (31.69%of Sales) • F-22 Raptor, C-130 Hercules, U-2 Spy Plane • Information Systems and Global Solutions (18.75%of Sales) • Cyber Security and Battlefield Intel • Missiles and Fire Control (15.80%of Sales) • HellFire Missile and Javelin Missile • Mission Systems and Training (16.06%of Sales) • Integrated Warfare Systems & Sensors (IWSS) • Space (17.69%of Sales) • commercial and military satellites, space probes, missile defense systems

  3. Lockheed Martin Background cont.

  4. Exhibit 3.2 – Estimating Value NEA Multiple

  5. Exhibit 3.3 – Estimating Value BV Multiple

  6. B/S Multiples • Book value of equity is low because of share buy backs. • The market values Lockheed’s assets well beyond their book value. • These multiples are not a good indicator of the firms value.

  7. Exhibit 3.5 – Estimating Value EPAT Multiple

  8. Exhibit 3.6 – Estimating Value NI Multiple

  9. Exhibit 3.7 – Estimating Value CI Multiple

  10. Exhibit 3.8 – Estimating Value Sales Multiple

  11. Exhibit 3.9 – Estimating Value US Government Contracts Multiple

  12. I/S Multiples • More accurately predict Lockheed’s market price. • This is a contract based industry • Lockheed has the largest market share • Government Contracts are the best Indicator for Lockheed. • Backlog $84 billion • EPAT and NI are less useful • Analysts predict greater NI and CI in the future • Cutting Costs • Higher Sales

  13. Sell/Hold Recommendation • Most multiple valuations suggest Lockheed is highly overvalued. • However, if Lockheed leads this industry and have a strong grasp on the needs of the US Military and its allies they will likely remain profitable into the foreseeable future. • Therefore, more advanced models will take this into account and more appropriately value Lockheed at its current market price.

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