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How Some Members Use Valuentum’s Investment Services

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By Brian Nelson, CFA Thank you for your membership to Valuentum. We serve a wide variety of investors, including dividend growth investors, value investors, and pure Valuentum investors, among others. Many different types of investors and professionals use our research and financial analysis in a whole host of applications from individual stock-selection to the evaluation of closed-end funds to an overlay in a money-management setting and beyond. We wanted to make sure that you know that, if you’re a dividend growth or income investor, that there are others that use our website to utilize the Valuentum process, fair value estimates and other metrics. Similarly, if you’re a practitioner of the Valuentum system, I wanted to make sure that you are … Read more

Dividend Growth Giant Lockheed Martin’s Share Price Surges 35%+ in 2022

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Image: Lockheed Martin’s shares have been bolstered by a robust share buyback program during the fourth quarter of 2022. Though we still expect shares to be resilient, some technical consolidation may be necessary. Image Source: TradingView By Brian Nelson, CFA We added Lockheed Martin (LMT) to the Dividend Growth Newsletter portfolio all the way back in January 2020 before the COVID-19 meltdown. Shares had lagged the S&P 500 for some time after surfacing the portfolio idea, but certainly not during 2022. Lockheed Martin’s shares have surged more than 35% during 2022, beating the market by a huge margin. We continue to like shares, but we would expect some share-price consolidation during 2023 after the huge gains. When Lockheed Martin reported … Read more

We’ve Updated Our Fair Value Estimate of Boeing; Has Aerospace Bottomed?

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Image: Boeing is expecting to turn the corner with respect to positive free cash flow in 2022 and grow it to ~$10 billion annually by 2025/2026. We think this is achievable. Image Source: Boeing By Brian Nelson, CFA The breakout of COVID-19 wreaked havoc on the airline business and the commercial aircraft-making business alike. But has the commercial aerospace industry finally bottomed? We took a hard look at our valuation model of Boeing (BA), and we’ve tweaked our near-term profitability assumptions and made material changes to our estimates of working capital assumptions in the out-years. Though the result was a lower fair value estimate for the aerospace giant, we reiterate that after several quarters of negative free cash flow, Boeing … Read more

Lockheed Martin Facing Near Term Headwinds; Longer Term Outlook Remains Bright

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Image Source: Lockheed Martin Corporation – Second Quarter of Fiscal 2022 IR Earnings Presentation By Callum Turcan Lockheed Martin Corporation (LMT) reported earnings for the second quarter of fiscal 2022 (period ended June 26, 2022) that missed consensus top- and bottom-line estimates, largely due to delays in securing another domestic F-35 contract and supply chain hurdles. In our view, these are near term headwinds that are resolvable. Reportedly, Lockheed Martin is nearing a deal worth ~$30 billion with the US Department of Defense (‘DoD’) covering orders for around 375 F-35 aircraft. As it concerns supply chain hurdles, the resumption of normal economic activities (as the worst of the COVID-19 pandemic is put behind the world economy) should steadily allow industrial … Read more

Dividend Growth Idea Lockheed Martin Doing Its Best to Arm Western Allies

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Image Shown: Dividend growth idea Lockheed Martin Corporation is very shareholder friendly. The defense contractor is doing its best to arm Ukraine and other Western allies during these difficult times. Image Source: Lockheed Martin Corporation – First Quarter of Fiscal 2022 IR Earnings Presentation By Callum Turcan The Russian invasion of Ukraine in February 2022 and simmering geopolitical tensions in East Asia between Western aligned nations and China over Taiwan and other issues have created a backdrop that is conducive to significant increases in national defense spending. Though we hope peace prevails soon, the realities on the ground in Ukraine and elsewhere call for North Atlantic Treaty Organization (‘NATO’) member nations and other Western aligned nations to ramp up their … Read more

Lockheed Martin On the Road to Recovery, Improved Free Cash Flow Visibility

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  Image: Heath Cajandig By Brian Nelson, CFA It was late October 2021 when Lockheed Martin (LMT) took a “big bath” of a third quarter. Back then, Lockheed Martin said it expected 2022 net sales to fall from 2021 levels, to ~$66 billion. At the time, we had been expecting revenue to advance to north of $70 billion during 2022, so the change in trajectory was quite pronounced. Its backlog fell to $134.8 billion from $147.1 billion on a year-over-year basis in the quarter, too. To say that the market was surprised in October would be an understatement because LMT’s stock fell double-digits following the news. Fast forward a few months, and Lockheed Martin is working to get things back … Read more

Lockheed Martin Shocks the Market

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Image: After years of backlog growth at Lockheed Martin, the third quarter of 2021 revealed a sharp year-over-year decline to the tune of ~8.3%. The company’s outlook also left a lot to be desired. By Brian Nelson, CFA Lockheed Martin (LMT) reported mixed third-quarter 2021 results Tuesday, October 26, but “mixed” might be too gracious of a word. Though it did beat the consensus number for third-quarter non-GAAP earnings per share, revenue didn’t just miss marginally, but by more than a $1 billion, with the top line falling 2.8% on a year-over-year basis. Clearly, Lockheed had promised more than it could deliver, and we had been taken in by the optimism. We expect to lower our fair value estimate. There’s … Read more

Dividend Growth Idea Lockheed Martin Has Ample Space Upside

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Image Source: Lockheed Martin Corporation – Second Quarter of Fiscal 2021 IR Earnings Presentation By Callum Turcan  The commercial and military opportunities in the realm of space have been growing at a brisk pace of late, and in our view, the growth runway in this area is immense. Lockheed Martin Corp (LMT) is a giant defense contractor with a sizable space business that caters to national defense, governmental, and commercial needs. We include Lockheed Martin as an idea in the Dividend Growth Newsletter portfolio, and shares of LMT yield ~3.1% as of this writing. The company has four core business operating segments and ‘Space’ is one of those segments, which generates a sizable amount of its annual sales as you … Read more

Lockheed Martin Boosts Guidance

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Image Source: Lockheed Martin Corporation – First Quarter of Fiscal 2021 IR Earnings Presentation By Callum Turcan Geopolitical tensions are on the rise worldwide. In recent weeks, Russian forces started massing on the border with Ukraine (though reportedly, those forces are beginning to pull back) as acrimony between Western governments and Russia continues to grow while the situation in Ukraine (i.e., Russia’s annexation of Crimea and involvement in eastern regions of Ukraine) remains in paralysis. Tensions between the US and China are building as well with an eye towards trading relations, espionage of all kinds, and cyber-attacks. The geopolitical backdrop indicates that the trajectory of defense spending is likely to continue growing in key developed and developing nations worldwide going … Read more

ICYMI: Valuentum’s Brian Nelson on the Latest Howard Marks’ Memo: “Something of Value”

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Valuentum’s President of Investment Research Brian Michael Nelson, CFA, explains why there are not really value and growth stocks, why most of the research in quantitative finance is spurious and needs to be redefined on a forward-looking basis, and why enterprise valuation (not the efficient markets hypothesis) should be the organizing principle of finance. Nelson explains his views about valuation, what it means to be a value investor, and investing in the context of Oaktree Capital Howard Marks’ latest memo, “Something of Value,” January 11, 2021. Please don’t forget to give the second edition of the book “Value Trap” a 5-star rating on Amazon here. Thank you for your membership! —– Tickerized for holdings in the IWM. Valuentum members have … Read more