2. Buy

3. • Global security and aerospace company
• Sector: Industrials
• Industry: Aerospace and Defense
• SIC: 3761: Manufacturer of Guided Missiles and Space
Vehicles
• Five Market Segments:
• Aeronautics
• Information Systems and Global Solutions
• Missiles and Fire Control
• Mission Systems and Training
• Space

4. $45,358
21%
$86,623
41%
$31,218
15%
$24,661
12%
$23,706
11%
2013 Sales
Lockheed Martin
(LMT)
Boeing (BA)
General Dynamics
(GD)
Northrop
Grumman (NOC)
Raytheon (RTN)

5. 31%
18%17%
16%
18%
Total 2013 Net Sales: $45.4 B
Aeronautics ($14.1 B)
Information Systems &
Global Solutions ($8.4
B)
Missiles and Fire Conrol
($7.8 B)
Mission Systems and
Training ($7.1 B)
Space Systems ($8 B)

6.  31% of Net Sales ($14.1Billion)
 Major Programs as shown on the 2013 10-K:
◦ F-35 Lightning Joint Strike Fighter
 5th generation Stealth fighter
 50% of Aeronautics sales
($7.05 billion)
◦ C-130 Hercules
◦ F-16 Fighting Falcon
◦ F-22 Raptor
◦ C-5M Super Galaxy
◦ Advanced Development Programs (Skunk Works)

7.  18% of Net Sales ($8.4 billion)
 Nature of orders: Many small contracts
◦ Data analytics
◦ Cyber security
◦ Air traffic management
◦ Energy Management
◦ Network-enabled
situational awareness
◦ Mission solutions for defense applications
 Various classified national security systems

8.  17% of Net Sales ($7.8 billion)
 Primarily Military Service
(Army):
◦ Missile and defense
systems
◦ Logistics and
technical services
◦ Fire control systems
◦ Mission operations support
◦ Manned & unmanned ground vehicles

9.  16% of Net Sales ($7.1 billion)
 Primarily Military Service (Navy):
◦ Ship & submarine mission/combat systems
◦ Mission systems & sensors for rotary & fixed-wing aircraft
◦ Sea and land-based missile defense systems
◦ Radar systems
◦ Simulation & training services
◦ Unmanned systems & technologies
◦ Littoral Combat Ship (LCS)

10.  18% of Net Sales ($8.0 billion)
 Primarily US Government Agencies:
◦ Satellites, Space Transportation Systems
& Missile Defense Systems
 Examples
 Trident D5 Fleet Ballistic Missile
 Space Based Infrared System (SBIRS)
 Orion Multi-Purpose Crew Vehicle
◦ Classified National Security Systems

11. 82%
17%
1%
Total 2013 Net Sales:
$45.4 Billion
US Government
($37.228 B)
Foreign Military
Sales ($7.718 B)
US Commercial &
Other ($.454 B)

12. 40,971
42,877
43,844 44,437
42,377 41,480 41,115
3,024
2,926
2,655
2,745
2,981
3,520 3,535
36,000
38,000
40,000
42,000
44,000
46,000
48,000
2009 2010 2011 2012 2013 P2014 P2015
$Millions
Net Costs and Expenses Net Earnings
$43,995
$45,803
$46,499
$47,182
$45,358 $45,000 $44,650
2009 2010 2011 2012 2013 P2014 P2015
EPS 7.86 8.03 7.90 8.48 9.29 11.00 11.40

13. 40,971
42,877
43,844 44,437
42,377 41,480 41,115
3,024
2,926
2,655
2,745
2,981
3,520 3,535
36,000
38,000
40,000
42,000
44,000
46,000
48,000
2009 2010 2011 2012 2013 P2014 P2015
$Millions
Net Costs and Expenses Net Earnings
$43,995
$45,803
$46,499
$47,182
$45,358 $45,000 $44,650
Sales - +4% +1.5% +1.5% -4.0% -1.0% -1.0%
Net Inc - -3% -9.0% +3.0% +8.5% +18.% +0.4%

14. 40,971
42,877
43,844 44,437
42,377 41,480 41,115
3,024
2,926
2,655
2,745
2,981
3,520 3,535
36,000
38,000
40,000
42,000
44,000
46,000
48,000
2009 2010 2011 2012 2013 P2014 P2015
$Millions
Net Costs and Expenses Net Earnings
$43,995
$45,803
$46,499
$47,182
$45,358 $45,000 $44,650
SPS - +9% +9% +2% -3.0% +2% +2.5%
EPS - +2% -2% +7% +9.5% +18% +3.6%

15. EPS 2011 2012 2013
LMT
 Basic 7.90 8.48 9.29
 Diluted 7.81 8.36 9.13
*8/25/2014 Prices Used *FYE 2013 Earnings Used
*FYE 2013 Dividend Payments Used
0
2
4
6
8
10
12
2009 2010 2011 2012 2013
LMT
BA
GD
NOC
RTN

16. 2013 Payout Ratio
 LMT: 52%
 BA: 32%
 GD: 24%
 NOC: 28%
 RTN: 35%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 2010 2011 2012 2013
LMT
BA
GD
NOC
RTN

17. 0
50
100
150
200
250
Adj Close
$187.19
+124%
$85.16

18.  2014
 October 31st: Systems Made Simple Acquisition
 October 24th: $4 Billion F-35 Deal
 October 15th: 10 year Hydrogen Fusion Project
Announced
 September 25th: $7.1 Billion F-35 Deal
 September 22nd: $828 Million Trident Missile
Contract

19. Strengths
 A very strong relationship with the Pentagon
 Improving operations efficiency in shrinking
industry.
 Product Diversification
Weaknesses
 Debt levels
 Expensive products

20. Opportunities
 Foreign Markets
 F-35 in high demand
 International tensions
 Possible creative destruction in energy sector
 Capabilities to lower costs
Threats
 Sequestration cuts
 High risk target for data breaches

21. 8
10
12
14
16
18
20
22
24
2009 2010 2011 2012 2013
Historical Average P/E
LMT
BA
GD
NOC
RTN

22. Comparative Measures
Price EPS P/E Beta
5 year EPS
Growth
Growth to
Beta
LMT $187 10.23 18.3 0.68 4.8% 0.07
BA 125 6.64 18.9 0.99 7.1% 0.07
GD 141 7.19 19.6 0.83 1.2% 0.01
NOC 137 9.27 14.7 0.77 1.9% 0.03
RTN 104 6.18 16.8 0.68 7.0% 0.10

23. Comparative Measures
Price EPS P/E Beta
5 year EPS
Growth
Growth to
Beta
LMT $187 10.23 18.3 0.68 4.8% 0.07
BA 125 6.64 18.9 0.99 7.1% 0.07
GD 141 7.19 19.6 0.83 1.2% 0.01
NOC 137 9.27 14.7 0.77 1.9% 0.03
RTN 104 6.18 16.8 0.68 7.0% 0.10
Current Justified
P/E 18x 23x
Price $187 $200-$240 +8% to 28%

24.  As of 2000, dividends continue to grow:
• At least 9%
• Every 4 quarters
 Current dividend per share payment is $1.50
 Conservative 5 year projection: $2.36

25.  Calculated present value of projected dividends:
 $29
 Projected stock price growth per ValueLine:
 PV Higher price ($200): $159
 Average ($180): $143
 Lower price ($160): $127
 Conservative Valuation: $156
 Averaged Valuation: $172

26.  P/E method weigted 50% (Averaged Figure)
+ DDM method weighted 50% (Averaged Figure)
 $205 per share
11/14/2014 Closing Price: $186.60
.....Gain (Loss): + 10%

27.  Buy Lockheed Martin
◦ Demand for products are growing.
◦ International issues are growing tense.
◦ Strong relations with US government.
◦ High diversification.

28. Appendix

29. Fiscal Year End 2013
ROE ROA ROR&D
LMT: 61% 8.2% 4.28x
BA: 31% 4.9% 1.49x
NOC: 18% 6.4% 3.85x
GD: 16% 6.6% 7.60x
RTN: 18% 7.8% 4.32x

30. 61%
31%
18% 18% 16%
0%
10%
20%
30%
40%
50%
60%
70%
LMT: BA: NOC: RTN: GD:

31. 8%
8%
7% 6%
5%
0%
2%
4%
6%
8%
10%
LMT: RTN: GD: NOC: BA:

32. 7.6
4.32 4.28
3.85
1.49
0
2
4
6
8
GD: RTN: LMT: NOC: BA:

33. EPS 2011 2012 2013
LMT
 Basic 7.90 8.48 9.29
 Diluted 7.81 8.36 9.13
*8/25/2014 Prices Used *FYE 2013 Earnings Used
*FYE 2013 Dividend Payments Used
0
2
4
6
8
10
12
2009 2010 2011 2012 2013
LMT
BA
GD
NOC
RTN

34. 2013 Payout Ratio
 LMT: 52%
 BA: 32%
 GD: 24%
 NOC: 28%
 RTN: 35%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 2010 2011 2012 2013
LMT
BA
GD
NOC
RTN

35. 2013 2012 2011
Sales from Products $35,691 $37,817 $36,925
Sales from Services 9,667 $9,365 9,574
Total Sales $45,358 $47,182 $46,499
Total COGS -41,171 -42,986 -42,755
Operating Income 4,187 4,196 3,744
% of Sales 9.23% 8.89% 8.05%
EBIT $4,155 4,072 3,631
% of Sales 9.16% 8.63% 7.81%
Income Tax Expense -1,205 -1,327 -964
% of EIBT 29.00% 32.59% 26.55%

36. 2013 2012 2011
Income Tax Expense -1,205 -1,327 -964
% of EIBT 29.00% 32.59% 26.55%
Other Income(Loss) from
Discontinued Ops net of
tax 31 0 -12
Net Income $2,981 $2,745 $2,655
Profit Margin 6.57% 5.82% 5.71%
Sales Growth (Geometric)
2011-2013 3.94%

37. 2013 2012
Cash including marketable securities $2,617 $1,898
Inventory 2,977 2,937
A/R 5,834 6,563
Total Current Assets 13,329 13,855
Total Noncurrent Assets 22,859 24,802
Total Assets 36,188 38,657
Total Current Liabilities 11,120 12,155
Total LT Liabilities 20,150 26,463
Total Liabilities 31,270 38,618
Preferred Equity - -
Common Equity 319 321
Total Stock Holder's Equity 4,918 39

38. 2013 2012
ROA 8.2% 7.1%
ROE 55.8% 6807.7%
Change in Revenue/Change in Cash -10.2%
Current Ratio 1.198651 1.13986
Quick Ratio 0.759982 0.696092
Working Capital 2,209 1,700
Equity as a % of Assets 13.6% 0.1%
Leverage 7.4 991.2
Inventory Turnover 26.2 12.5