Corporate insiders know their companies more intimately than anyone else. They also have access to real-time information that outsiders are unlikely to be aware of. If they’re buying stock, it is generally a positive development.
Here, we are going to highlight insider buying by a director at Lockheed Martin Corp (LMT: US). Lockheed Martin is an American company whose core business is in the aerospace and defense sector but is also involved in information security and the technology sector. The company supplies the private sector as well as governments, however, close to half of its revenues come from the US Department of Defense. It’s listed on the New York Stock Exchange and currently has a market capitalization of €118.9 billion.
Lockheed Martin Corp: Insider Buying
Our insider transaction data shows that on April 21, a Director at Lockheed Martin, John Donovan, purchased 568 LMT shares at a price of $440.55. This purchase cost the insider around $250,000.
We see this insider activity as interesting for a couple of reasons.
Firstly, insider purchases at Lockheed Martin are not very common. Our data shows that this is the first buy from an insider since August 2019. We think it’s noteworthy that the insider has decided to spend $250,000 on stock now as it signals that he is confident in the future prospects of the group.
Secondly, Mr. Donovan’s employment history is very impressive. He was CEO of AT&T Communications for two years up until 2019. Before this, he was Chief Strategy Officer and Group President of AT&T Technology and Operations and was the Chief Technology Officer at AT&T Inc prior to this. He was also CEO and Chairman of inCode Telecom and was a Partner at Deloitte Consulting where he specialized in technology. Overall, he is a very experienced businessman so he is likely to have a good understanding of his company’s prospects.
Solid First Quarter
Lockheed Martin had a solid start to the year despite Covid-19 having an impact on supply chains.
Net sales of $15 billion for the first quarter of 2022 were slightly below the $16.3 billion achieved in Q1 2021. The net earnings of $1.7 billion were just behind the $1.8 billion achieved a year prior. Free cash flow of $1.1 billion was higher than the company anticipated.
Looking ahead, the outlook for the group appears to be strong as the war in Ukraine has put the defense at the front of a lot of countries’ minds.
“Lockheed Martin had a solid start to the year by delivering margin expansion and free cash flow above our expectations despite recent Covid-surge impacts on our operations and supply chain. We remain confident in our guidance for the remainder of the year and our growth outlook beyond,” said Lockheed Martin Chairman, President, and CEO James Taiclet.
Having read through the Q1 update we see the recent insider buying at Lockheed Martin as bullish. In spending $250,000 on company stock the director appears to be very confident in the future prospects of the group and is sending out a signal that he believes the market is undervaluing the shares.