General Dynamics Corporation (GD), Northrop Grumman Corporation (NOC): Should Investors Be Happy About An Additional $4 Billion Share Buyback?

Although Lockheed Martin Corporation (NYSE:LMT) has a higher leveraged balance sheet, its free cash flow paints a better picture than the other two to support its increasing dividend. Lockheed Martin Corporation (NYSE:LMT)’s share repurchase activities had only picked up slightly since early 2012, as seen from the chart below.

Source: YCharts.com

Bottom line

While the share price had climbed double digits for all three companies YTD, investors need to be more careful with these so called “defense” providers now. With expected sales decline, increasing share repurchase and dividend further pressured the weak free cash flow for Northrop and General Dynamics Corporation (NYSE:GD). Investors need to stay alert, as share buyback may not always be a good thing for the long-term.

The article Should Investors Be Happy About An Additional $4 Billion Share Buyback? originally appeared on Fool.com is written by Nick Chiu.

Nick Chiu has no position in any stocks mentioned. The Motley Fool owns shares of General Dynamics, Lockheed Martin, and Northrop Grumman. Nick is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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