The Insider Buying at Lockheed Martin Continues

Insider buying can provide clues about a stock’s next move. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.

In this report, we are going to highlight a large insider purchase at Lockheed Martin Corp (LMT:US). Lockheed Martin is an American security and aerospace company that is engaged in the research, design, and development of advanced technology systems, products, and services. The business, which is headquartered in Bethesda, Maryland, is organized around four core business areas: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space. It’s listed on New York Stock Exchange and currently has a market cap of around $113.9 billion.

Insider Buying

Our data shows that on July 19, board member John Donovan purchased 548 LMT shares at a price of $457.07 per share. This trade cost the insider approximately $250,000 and increased his holding to 3,378 shares.

Building up a Large Position

Mr. Donovan appears to be building up a large position at Lockheed Martin. We say this because the insider has spent roughly $250k on stock every quarter since the second quarter of last year. In total, he has invested around $1.5 million in the company over this time horizon, which suggests that he is quite bullish on its stock.

We have noted before that Mr. Donovan has experience in the security industry. Currently, he is a member (and former Chair) of the President’s National Security Telecommunications Advisory Committee (NSTAC). So, he is likely to have a good understanding of Lockheed Martin’s prospects.

Strong Demand for Military Equipment

Lockheed Martin recently produced a strong set of results for the second quarter of 2023 on the back of strong demand for defense equipment.

For the quarter, sales came in at $16.7 billion, up 8% year on year and ahead of the consensus forecast of $15.9 billion. Meanwhile, earnings per share came in at $6.63, topping expectations of $6.45.

As a result of this strong performance, the company raised its guidance for full-year revenue and profit. For the year, it now expects to generate a profit of $27.00 to $27.20 per share, up from previous guidance of $26.60 to $26.90 per share, and net sales of between $66.25 billion and $66.75 billion, versus an earlier forecast of $65 billion to $66 billion. It noted that its backlog was a record $158 billion at the end of the quarter.

“We are confident in our return to growth and ability to reward our shareholders over the long run with reliable free cash flow per share expansion and cash deployment,” commented Chairman, President, and CEO Jim Taiclet.

In light of these strong results, we see the insider buying here as a bullish development.