Why Lockheed Martin Stock Soared Today

• President Trump wants a $1.5 trillion defence budget.

• He besides wants defence companies to walk much connected weapons production, not dividends and banal buybacks.

• 10 stocks we similar amended than Lockheed Martin ›

President Trump announced Wednesday helium wants to walk $1.5 trillion connected defense:

"For the Good of our Country ... our Military Budget for the twelvemonth 2027 should not beryllium $1 Trillion Dollars, alternatively $1.5 Trillion Dollars ... This volition let america to physique the 'Dream Military' that we person agelong been entitled to, and, much importantly, that volition support america SAFE and SECURE."

Defense stocks successful wide are surging, and Lockheed Martin (NYSE: LMT) banal successful peculiar gained 6.2% done 10:50 a.m. ET.

The President didn't accidental wherever helium wants to walk the $1.5 trillion, oregon which companies volition person it. One happening helium made crystal clear:

Once Lockheed Martin and its peers get the authorities money, they indispensable put it to amended weapons prime and attraction and accelerate accumulation -- not conscionable manus it to executives successful the signifier of fatter paychecks, oregon funnel it to shareholders via dividends and banal buybacks.

In a abstracted post, President Trump blasted defence companies for paying "exorbitant and unjustifiable" enforcement compensation, insisting defence CEOs shouldn't gain much than $5 cardinal per year. He besides promised to "not licence Dividends oregon Stock Buybacks for Defense Companies" until they've addressed his complaints.

This could spell occupation for Lockheed. On the 1 hand, Lockheed tin expect a gross boost. It volition request to walk the wealth connected superior investments, however, hurting nett margins earned on that revenue.

What does this mean for investors? Lockheed's been increasing gross astatine a sub-3% complaint the past 5 years, and that should amended if the $1.5 trillion comes through. On the different hand, Lockheed's nett borderline has already fallen from 10.2% 2 years agone to 5.7% implicit the past 12 months.

Expect that number to support connected falling.

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