CALLLMT2 months ago9.3Kviews

Lockheed Martin: the order book has outgrown its historical anchor

Backlog from the new customer set passed the traditional one for the first time. That diversifies the political and cyclical risk the multiple has always carried.

Adam Rosen@adam_rosen

Evidence · 4 cards

The case

Lockheed Martin: the order book has outgrown its historical anchor

Backlog from the new customer set passed the traditional one for the first time. That diversifies the political and cyclical risk the multiple has always carried.

The edge

The Street says

Consensus models the cycle turning in the second half
Sell-side target clusters within 8% of spotAuto

I say

The turn already happened in order intake two quarters ago
My number is 14% above the street on the out yearCreator est.

The kill switch

I'm wrong if

Order intake declines two consecutive quarters
Gross margin below 44% on any printCreator est.
Close below the lock price on above-average volume

Checklist

Order intake inflected
Pricing held through the renewal cycleAuto
Capacity expansion fundedCreator est.
Second source contract signed

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Discussion · 3

Sam WhitfieldJUL 2

Good to see an invalidation level actually stated. The lag between intake and revisions is the whole trade. What is the base rate on this kind of setup working?

Omri ShakedJUL 1

Finally someone put numbers on this. The distinction between adequate reserves and the earnings path is well made. What is the level where you would walk away?

Marco BianchiJUN 30

Agree with the direction, less with the magnitude. Second source in a constrained market is genuinely underrated. Is there a cleaner way to express this than the equity?