Lockheed Martin (NYSE: LMT) beat on earnings but missed on revenue because of F-35 delivery delays, and narrowed its full-year guidance. Investors were underwhelmed by the news, sending Lockheed shares down 5% as of 10:30 a.m. ET.

A solid quarter beneath the surface

Lockheed Martin, the world's largest defense contractor, earned $6.80 per share on sales of $17.1 billion in the third quarter. That's a mixed result relative to Wall Street's $6.50 per share on sales of a $17.4 billion consensus estimate.

Delivery delays with the F-35 aircraft resulted in a $400 million sales headwind in the quarter, but the company expects to make up at least some of that miss in the quarters to come. The company raised its full-year 2024 earnings forecast to $26.65 per share, from $26.10 to $26.60 per share. It now expects $71.25 billion in annual revenue, narrowing its prior projection for $70.5 billion to $71.5 billion.

"As a result of our strong year-to-date results and confidence in our near-term performance, we are raising the outlook for full-year 2024 sales, segment operating profit, [earnings per share], and free cash flow," CEO Jim Taiclet said in a statement.

Is Lockheed Martin a buy?

Wall Street appears to be focused on the anemic 1% year-over-year sales growth in the quarter, but for long-term-focused investors, there were no signs of danger in this quarter.

Lockheed Martin's 12.5% operating margin came in about 60 basis points ahead of expectations, and free cash flow of $2.1 billion was well ahead of Wall Street's $1.3 billion forecast. Strong space and missile bookings also helped Lockheed Martin produce a book-to-bill ratio of 1.43 in the quarter, setting it up well for future periods.

The company also raised its dividend by 5% and authorized $3 billion in additional share repurchases.

Lockheed Martin has a leading role on some of the nation's most important defense priorities, and a backlog of $165 billion in future business provides some degree of predictability. For investors looking for a solid income investment with some growth upside, Lockheed remains a solid defensive choice.

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