Can anyone remember the last time Lockheed Martin (NYSE:LMT) dropped earnings on Wall Street but failed to obliterate its target? I can, but I have to cheat, and check the records. The answer is that it has been 21 quarters -- more than five straight years -- since Lockheed missed an earnings estimate. On Thursday, it aims to end fiscal 2008 with another bang.

What analysts say:

  • Buy, sell, or waffle? Eighteen analysts keep Lockheed on their radar, giving it 10 buy ratings, seven holds, and a sell.
  • Revenue. On average, they're looking for sales to rise 2% over last year's fourth quarter to $11.1 billion.
  • Earnings. Profits may eke out a 1% increase to $1.91 per share.

What management says:
Updating us on annual guidance last quarter, Lockheed predicted it would end the year with about $42 billion to $43 billion in revenue, earning up to $5 billion in operating profit thereon. The company further expects to achieve a stellar return on invested capital of nearly 21%. Free cash flow should be in the neighborhood of $3.4 billion.

What management does:
So if all goes perfectly, Lockheed's telling us it could end the year with as much as an 11.6% operating margin. This would mark yet another quarter of consistently rising profit margins and maintain Lockheed's lead over defense contracting rival Boeing (NYSE:BA), and help it pass Raytheon (NYSE:RTN) and close the gap with Textron (NYSE:TXT).

Margins

6/07

9/07

12/07

3/08

6/08

9/08

Gross

10.4%

10.7%

10.8%

10.8%

11%

11%

Operating

9%

10%

10.2%

10.4%

10.8%

11.2%

Net

7%

7.1%

7.2%

7.2%

7.4%

7.5%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Speaking of defense contractors, the big story in the sector lately has been the looming threat that pension fund shortfalls pose to profits. Last quarter, we saw Morgan Stanley downgrade United Technologies (NYSE:UTX) on pension fears. Last week, Credit Suisse downgraded Northrop Grumman (NYSE:NOC) for the same reason. And yes, it was pension worries that shot Lockheed down when it last reported earnings as well.

Personally, I still think the worries are overdone. What I see here is still a stock trading for a P/E of 10 and 11 times free cash flow, and is expected to grow at 11% or better once its F-35 fighter sales start picking up speed. Unless Lockheed tells us something Thursday that changes the picture substantially, the stock looks most attractively priced.

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Fool contributor Rich Smith owns shares of Boeing. The Motley Fool has a disclosure policy.