In 2015, Lockheed Martin Corp unveiled the advanced test high energy asset (ATHENA) laser weapon system. It is evident the company seeks to expand testing to unmanned aerial regions. The company invested heavily in research and development in energy systems at Lockheed Martin which takes up a budget of up to $714 million. The goal of the company seeks to make its products affordable as well as create a more affordable per unit cost. Lockheed is also a leader in continuous advancement in state of the art technologies. Technologies that can be trusted as well as complicated to control. The company sought to invest in developing autonomous systems for the sole purpose of solving lots of problems that involve deep space exploration as well as emergency response. The key strategy adopted by the company has been the innovating materials using computational methods, informatics, and experimentation. In this way, the company has been able to use methods of developing new structures as well as devices. From the laser weapon systems, radio frequency as well as electromagnetic energy as well other technologies designed by the organization to operate in air, ground and the sea, the company has shifted its focus to address the accuracy, mobility, size, weight and power needs. Lockheed is indeed the top company regarding innovation of technological devices dealing with artificial intelligence, autonomy, drones as well as cyber security. Advancing in great depths in the global aerospace and defense technology, the company’s freedom systems are the top company in free technology. Lockheed has developed systems that utilized complex algorithms that internalize and process information, patterns in data and provide viable output to humans. Autonomous systems are the source of solutions to human’s many problems especially when it comes to exploring ocean depths as well as space. Rescue missions which require an emergency response and disaster management are achieved through the use of autonomous systems. An excellent epitome of how these systems work is when aircraft are about to crash. Autonomous systems are designed to detect whenever something is amiss, and it tries to resolve the problem before the plane crashes. Through the autonomous system, lives can be saved and damage evaded.
With the increased level, strategies and techniques of crime, advancement in technology has become indispensable.
The company also uses mobile collaboration and social media technology in holding conversations in both enterprise and consumer spaces. Lockheed advanced systems have the ability to listen and process information from those conversations at the same time. The use of broadband technology in supporting radar, electronic warfare and communications missions is one of the top strategy used by Lockheed. Additionally, the use of sensors in listening, detecting and processing potential threat has enabled the company to stay ahead of its competitors.
Lockheed is one of the businesses that has been at the forefront in expanding its revenue over the years. However, it has done so with a decreasing trend. In 2012, it recorded a 5.8percent revenue growth while in 2012, it recorded a 3.2 percent growth. In 2014, the growth further declined to 1.9percent. The overall global aerospace and defense (A&D) sector revenues are expected to fall. The revenues of in the security industry have been declining, and this can be attributed to the restricting of the global military expenditure. Program cancellations, as well as delays in the primary weapons programs as well as the drop out of the main defense contracts, could also have been a factor. What is even more surprising is that the strong US currency led to an adverse effect of the revenues. The GDP in the country remained relatively stable while the commodity prices decreased. Additionally, the resurgence of global security threats and growth in defense budgets in many states and countries are likely to promote global defense subsector revenue growth in the future. The global A&D sector revenues are estimated to grow 3.0 percent in the coming period.
Business model
The primary operations spearheaded by Lockheed include information systems and global solutions, missiles & fire control, mission systems & training, aeronautics as well as space systems. Aeronautics renders the highest revenues for the company followed by missiles and fire control as well as space systems.
Porter analysis stock performance
The porter’s five force framework is applicable in investment analysis and is helpful in analyzing a firm’s competitiveness in the industry. The structure is designed to examine the industry-specific conditions and establish how high the company has positioned itself in the market to absorb the changes in the target market. The five forces include the threat of substitute services, increased competition, new entrants in the market, supplier bargaining power as well as customer’s bargaining power. Lockheed faces the threat of substitution of its technology in that competitor such as Boeing may come up with an alternative technological device especially a scientific anatomical system. The threat of new entrants is almost zero since there exist lots of inhibiting factors in entering the industry. The company has a great team of workers who are highly talented and motivated.
Competition and leaders, stock prices compared to relevant indices and competitors
The competitor of Lockheed Martin Corp includes Boeing Co, General Dynamics Corp, Thales SA, Raytheon Company as well as Northrop Grumman Corp. Since 2012, Lockheed Martin’s stock performance has been soaring by more than 50percent. The stock outperformed the market and the aerospace & defense industry. As a result of its particular sector, the stock is not as volatile as the market during economic downswings. The main clients of the company are the government as well as foreign governments who are looking to increase their military expenditures. Lockheed has adopted changes in its product portfolio, its position within the market, its cash management strategy, robust innovation in technology as well as taking advantage of the potential and upcoming technologies. Investment in stock or debt securities involves risk and uncertainties. Lockheed Martin Corp seeks to identify, manage and mitigate risks in business. The company heavily depends on U.S. Government contracts. Lockheed stock is quite high in its growth and shows prospects of growing even more. Sales growth, especially in Boeing and Airbus, was the highest.
Volatility, systematic and specific risks
Lockheed’s beta is 0.91. The instability of the company’s according to the CAPM is consistent with the market volatility. The volatility of Lockheed was volatile as it was lower than one. The market risk premium historically averaged at approximately 7percent while the risk-free rate average at 4percent. When compared to the other competitors in the market, the beta of Lockheed was the second highest after then of Boeing which averaged at 1.04. Looking at the market capitalization, Lockheed was also second after Boeing which has a market cap of 107, 540. General Dynamics Corp was third. From these statistics, it can be seen that the higher the market capitalization, the higher was the beta.