Stock to keep an eye on as geopolitical tensions rise

US defense and aerospace company Lockheed Martin has posted strong gains of late, rebounding more than 12% from early October lows.
The rise is mainly due to increased tensions in the Middle East.
However, the earnings report for the third quarter of 2023 released this week also played a role.
In this article, in collaboration with XTB experts, we take a look at the company's earnings and its valuation.
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Check out XTBLockheed Martin's offering with mixed third-quarter earnings Lockheed Martin reported third-quarter 2023 earnings Tuesday ahead of the Wall Street session.
The report can best be described as mixed, with sales slightly above expectations and operating profits slightly below estimates.
A decline in revenue in the key Air Force unit is concerning, and the company explained that this is due to lower net sales in the F-35 program, resulting from lower volume of production contracts and component shortages.
Order backlog increased 12% year over year to $156 billion.
Big hits were identified in operating cash flow and free cash flow.
As regards the guidance for the full year, the company has decided to keep it unchanged.
Third Quarter 2023 ResultsNet Sales: $16.88 Billion vs.
$16.76 Billion Expected (+1.8% YoY).
Missiles & Fire Control: $2.94 Billion vs.
$2.89 billion dollars expected (+3.8% y-o-y).
Aeronautics: $6.72 billion compared to $6.82 billion expected (-5.2% y-o-y).
Rotary and mission systems: 4 $12 billion vs.
$3.96 billion expected (+9% YoY).
Space: $3.10 billion vs.
$3.05 billion expected (+7.6% YoY) Operating profit: $2.04 billion versus $2.09 billion forecast (-5.4% year-over-year).
Missiles and fire control: $398 million versus $375.1 million forecast ( +4.2% yoy).Aeronautics: 671 million dollars compared to the 708.7 million dollars expected (-12% yoy).Rotary and mission systems: 482 million dollars compared to 490.5 million dollars expected (+16% y-o-y).
Space: $259 million vs.
$274.3 million expected (-14% y-o-y).
Adjusted EPS: $6.77 vs.
$6.67 expected (-1.5% YoY).
Operating Cash Flow: $2.89 billion vs.
$2.39 Billion Expected (-7.7% YoY).
Free Cash Flow: 2.53 billion versus $1.93 billion expected (-7.4% y-o-y).
Backlog: $156.03 billion (+12% y-o-y).
Full-year EPS guidance: $ 27.00-27.20 (expected $27.15) Cash flow from operations: $8.15 billion.
Capital expenditures: $1.95 billion.
Net sales: $66.25-66.75 billion.
Free cash flow: “at least” $6.20 billion.
Lockheed Martin reported declining operating margins in its aviation and space units in the third quarter of 2023.
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Invest in stocks now with XTB! Middle East tensions support Lockheed stock price As a major defense company, Lockheed Martin shares are sensitive to geopolitical developments.
The company's stock price rose after the start of Russia's invasion of Ukraine in early 2022 and also saw a rise last week following the outbreak of war between Israel and Palestine.
The growing number of military conflicts around the world is leading to an increasing trend in defense spending and this is expected to support the business of defense companies in the future.
This is especially true for Lockheed Martin as it is the largest US military contractor and has received contracts from the US Department of Defense worth $46 billion in 2022.
Lockheed Martin outperformed the Dow Jones US Aerospace & Defense Index in 2022 and in 2023.
Source: Bloomberg Finance LP, XTB A Look at the Chart Taking a look at the Lockheed Martin chart, we can see that the stock has been trading in a strong upward movement since the start of the previous week, following the outbreak of the war between Israel and Palestine.
Shares broke out of the $440 resistance zone yesterday and recorded the highest close since early September 2023.
Given the escalating situation in the Middle East, it cannot be ruled out that defense companies will remain in investors' favor .
The short-term resistance zone to watch is above the $455 area and is marked by the previous price reaction and the 200 session moving average (purple line).
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