Lockheed Martin Corporation (LMT): Don’t Get So Defensive…or Maybe You Should

A second positive factor for investors to keep an eye on is the continued strengthening of Lockheed’s balance sheet. While the company still carries net long-term debt of $3.089 billion, this was an improvement over last year’s net position of $4.26 billion. This decrease represents a better than 27% improvement in Lockheed’s balance sheet and is significantly better than the performance turned in by their peers.

For point of comparison, Northrop Grumman Corporation (NYSE:NOC) reported the worst performance with their net long-term debt increasing from $68 million to $754 million on a year-over-year basis. Raytheon Company (NYSE:RTN) basically held steady with just a slight increase in their net long-term debt.

Though The Boeing Company (NYSE:BA) carries a net cash balance, the company’s net cash and investments dropped from $4.585 billion last year to $3.6 billion this year, a significant decline of better than 20%. As you can see, Lockheed Martin is putting its extra cash flow towards shoring up its balance sheet, which not only should improve results but also protect the company against any future downturn in defense spending.

It’s Okay to Be Defensive

In the end, investors in Lockheed Martin Corporation (NYSE:LMT) are treated to the best yield of the group, the second best expected earnings growth, strong cash flow growth, and a better balance sheet. On a relative basis, I would argue the only company that investors might choose over Lockheed Martin in this space would be The Boeing Company (NYSE:BA). Though Boeing pays a much lower yield, their higher growth rate more than makes up for their higher P/E ratio.

If you compare Lockheed to Northrop Grumman Corporation (NYSE:NOC) and Raytheon Company (NYSE:RTN), it really is a no contest. Lockheed pays a better yield, is growing faster, and sells for nearly the same P/E ratio as its lower performing peers. Given the company’s history of rewarding shareholders by increasing the dividend, as the saying goes, maybe “the best offense is a good defense.”

Chad Henage owns shares of Lockheed Martin. The Motley Fool owns shares of Lockheed Martin Corporation (NYSE:LMT), Northrop Grumman Corporation (NYSE:NOC), and Raytheon Company (NYSE:RTN).

The article Don’t Get So Defensive…or Maybe You Should originally appeared on Fool.com.

Chad 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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