Lockheed Martin Valuation Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Lockheed Martin Valuation Case Solution

Case overview:

This case focuses on the analysis ofa global giant of aerospace company, known as Lockheed Martin, and its competitors. Lockheed Martin is a global security and aerospace company. The Company is engaged in the research, design, development, manufacturing, integration and sustainment of advanced technology systems, products and services. The Company operates in five segments: Aeronautics, Information Systems & Global Solutions (IS&GS), Missiles and Fire Control (MFC), Mission Systems and Training (MST) and Space Systems.

lockheed case solution

Lockheed Martin operates in an Aerospace Product and Parts Manufacturing Companies and has126,000 employees. It has $46 billion revenue globally and has a market capitalization rate of $73.6 billion. In last 5 years, Lockheed Martin’s common stock increased from $80 to $240, which indicates 200% growth in its common shares.

Lockheed Martin's top competitors are BAE Systems, EADS, Boeing, Cassidian (Airbus Military), Dassault Group, Eurofighter Jagdflugzeug GmbH, Finmeccanica, General Dynamics, Northrop Grumman, Panavia Aircraft GmbH, Raytheon, and SAAB AB. However,in this report, the focus is on Boieng and EADS.

Understanding the firm and its Competitors

Lockheed Martin is an American global aerospace, defense, security and advanced technologies company with global interest. It was formed by the merger of Lockheed Corporation with Martin Marietta in March 1995. It is headquartered in Bethesda, Maryland, in Washington, DC, area. Lockheed Martin employs 126,000 people worldwide. Marillyn Hewson is the current President and Chief Executive Officer of the company.

Lockheed Martin is one of the largest companies in the aerospace, defense, security, and technologies industry. It is the world's largest defense contractor based on revenue for fiscal year 2014. In 2013, 78% of Lockheed Martin's revenues came from military sales, as a result, it topped the list of US federal government contractors and received nearly 10% of the funds paid out by Pentagon. In 2009, the US government contracts accounted for $38.4 billion (85%), foreign government contracts $5.8 billion (13%), and commercial and other contracts for $900 million (2%).

Boeing is an American multinational corporation that designs, manufactures, and sells airplanes and it is one of the major competitors of Lockheed Martin. Boeing is among the largest global aircraft manufacturers, as well as it is the second-largest defense contractor in the world based on its revenue in the year 2013,and is the largest exporter in the United States in terms of dollar value.

Airbus Group SE is a European multinational aerospace and defense corporation. Airbus is also the major competitor of Lockheed Martin. The group comprises of the three business divisions, which are Airbus, Airbus Defense and Space, and Airbus Helicopters.Airbus Group comprises of the divisions for development and marketing of civil and military aircraft, as well as communications systems, missiles, space rockets, helicopters, satellites, and related systems.

Analysis of risk factors, economic conditions and challenges

Investment in Lockheed Martin’s common stock or debt securities involves risks and uncertainties. One of them is the vast dependency of the company on the US government, in fact 78% of Lockheed Martin’s total sales are generated from government’s purchases. The US government has continued to reduce its budget deficit, which might create an issue for Lockheed Martin, which indicates a reduction in spending and purchases from Lockheed by the government will result in a higher loss in percentage of Sales.

Lockheed Martinis subject to a number of procurement laws and regulations. Its business and its reputation could be adversely affected if it fails to comply with these laws. Moreover, it can be seen that the environment of the industry in which Lockheed is operating is full of competition and failure to comply with single law might result in huge penalties.

Cost control has become a major issue for Lockheed Martin especially for those contracts which are fixed price contracts. It is difficult to generate margins from a fixed price contract by Lockheed Martin..............

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Lockheed Martin Valuation Harvard Case Solution & Analysis