Lockheed Martin’s first-quarter will show if recent stumbles have affected bottom line

Earnings Preview: Lockheed Martin

BETHESDA, Md. — Lockheed Martin Corp., the nation’s largest defense contractor, reports first-quarter earnings before the market opens on Wednesday.

WHAT TO WATCH FOR: Lockheed usually delivers consistent earnings and has been a big beneficiary of steady Pentagon demand for its fighter jets, missiles and military software in recent years.

But Lockheed has also faced difficulties recently from tightening defense budgets and stumbles on some major contracts.

The Pentagon capped its purchase last year of the pricey Lockheed-made F-22 fighter at much lower levels than originally planned, and Lockheed lost a big contract to build new helicopters to carry the president.

During the first quarter, Defense Secretary Robert Gates also rebuked Lockheed for cost overruns and delays in the huge F-35 fighter jet program, holding back $614 million in performance bonuses from the company.

Lockheed’s balance sheet should be helped in 2010 by lower pension expenses, which were a major drag last year. Its backlog of orders also remains high, a sign that its business should be fairly stable despite some of its higher profile problems.

Investors will also look at Lockheed’s guidance for the rest of the year. The company’s 2010 forecast in January came up short of Wall Street consensus.

WHY IT MATTERS: Lockheed is the Pentagon’s biggest supplier of weapons, making billions of dollars each year from defense contracts. For example, the Defense Department plans to eventually buy 2,450 of the F-35 fighter jets made by a Lockheed-led team. The program has an expected price tag of $323 billion.

WHAT’S EXPECTED: Analysts polled by Thomson Reuters expect Lockheed to earn $1.34 per share in the first quarter on revenue of $10.6 billion.

LAST YEAR’S QUARTER: In the first quarter of 2009, Lockheed earned $666 million, or $1.68 cents per share on revenue of $10.4 billion.