Lockheed Martin Corporation (LMT) Earnings: Shares Fall As F-35 Fighter Jet Maker’s 2016 Earnings Forecast Disappoints

Lockheed Martin Corporation (NYSE:LMT) shares tumbled nearly 4 percent Tuesday despite beating sales and profit forecasts for the fourth quarter and full year 2015. Investors reacted to the company’s announcement in its earnings report that per-share earnings for 2016 would be lower than analysts’ estimates.

The world’s largest defense contractor said it earned an unadjusted $3.01 per share on $933 million in profit, up from $2.82 per share on profit of $904 million in the same quarter the previous year. Revenue increased to $12.9 billion from $12.5 billion. The forecast for the fourth quarter was for $2.92 per share on $903 million.

Chief Executive Officer Marillyn Hewson also announced that her company would separate its IT business and combine it with Leidos Holdings Inc., a national security firm, in a $5 billion trade. The move would allow the maker of F-35 joint strike fighter jets to focus on its more lucrative business in defense aeronautics. The company also closed its $9 billion deal to buy Blackhawk helicopter-maker Sikorsky from rival United Technologies Corp.

“The corporation completed a year of exceptional operational accomplishments for customers and financial returns to stockholders,” Hewson said in a statement. “The successful closure of the Sikorsky acquisition and completion of the strategic review of our IS&GS businesses, coupled with our record backlog, position the corporation for future growth and value creation for our customers and our stockholders.”

The Information Systems & Global Solutions (IS&GS) is Lockheed’s IT division that it’s combining with Leidos. It includes cybersecurity, cloud storage and air traffic control systems. It’s one of the company’s three divisions, including missile systems and space programs, that saw sales drop last year. The company said it spent $102 million to reduce its workforce last year amid a downturn in global defense spending.

Lockheed Martin also lifted the company's earnings guidance for 2016 in the range of $11.45 to $11.75 per share on revenue of between $49.5 billion and $51.0 billion. But the Wall Street consensus was for earnings per share of $12.23, which encouraged some investors to sell the stock.

Lockheed Martin shares dipped 4.1 percent Tuesday morning after the earnings were released. The company’s share price is up 3.7 percent for the past 12 months and down 6.6 percent since the start of the year as of Tuesday morning.