Lockheed Martin (LMT  ) shares were higher following the company's Q4 earnings report which showed the company exceeding analysts' expectations. As a defense & aerospace stock, the company has outperformed over the past year with a 17% gain, while the S&P 500 (SPY  ) is down 9% over the same time period.

In recent months, the stock has underperformed due to rising risk appetites which has led to inflows into more high-beta sectors, while defensive ones have seen outflows. Yet, it's fair to argue that the macro environment has only improved given the results of the midterm elections which led to victories for politicians on both sides of the aisle who support providing support to Ukraine, the decline in longer-term rates, and recent news that the F-35 may also be part of Ukraine's defense.

Inside the Numbers

In Q4, Lockheed Martin reported $7.79 in earnings per share which exceeded analysts' expectations of $7.41 per share in earnings. Revenue also topped expectations at $19 billion vs $18.3 billion. In total, this was a 7% increase in revenue and a 6% jump in earnings.

The company's guidance for the full year came in in-line with expectations. It sees earnings per share between $26.60 and $26.90 with revenue between $65 billion and $66 billion. Another tailwind for the company is that cutting defense spending doesn't seem to be on the table amid the standoff over the debt ceiling which is expected to be a major issue in 2023.

Another tailwind is that the company continues to aggressively buy back stock which is leading to strong performance from an EPS basis. For the full year, the company's revenue declined by nearly $1 billion and is expected to do the same in 2023 given the long-term nature of defense contracts. However, this is more than offset by the company buying back $8 billion which is equivalent to about 6% of its total float.

In a statement accompanying the release, CEO James Taiclet said, "Lockheed Martin's stronger than expected finish to the year demonstrated the company's reliability and resiliency to meet commitments in challenging environments, while leading the industry's critical security advancements for our nation and allies."