Lockheed Martin Corp's (LMT.N) quarterly profit and sales missed Wall Street estimates on Tuesday and the Pentagon's No. 1 weapons provided a tepid profit forecast for 2018, sending shares down more than two per cent.

Despite the first profit miss after five quarters in a row of beating estimates, Lockheed raised its full-year sales forecast, set a higher dividend and forecast sales would grow another 2 per cent next year.

Analysts noted that Lockheed's 2-per cent growth forecast for 2018 was conservative given the market's expectations of higher defense spending under U.S. President Donald Trump.

During a conference call with Wall Street analysts, Bruce Tanner, Lockheed's CFO, was upbeat about the company's growth prospects and record US$104-billion orders backlog, but he was cautious about the speed of the company's growth projections. "It just doesn't happen overnight and especially if you will allow me to call 2018 overnight," he said.

During the quarter, operating profit from Lockheed's Space Systems business unit halved to US$218 million, partly due to a non-recurring pre-tax gain that had occurred in the third quarter of 2016 as well as slightly lower sales volume in two government satellite programs.

Tanner said "we expect this timing-related shortfall will be more than made up for during the fourth quarter."

The aeronautics division, which makes the F-35 fighter jet, was the only Lockheed business unit to increase profitability from last year.

Lockheed's net earnings from operations fell 13.8 per cent to US$939 million, or US$3.24 per share, from US$1.1 billion, or US$3.61 per share. Increased sales of US$12.2 billion from US$11.6 billion a year ago, were below Wall Street's expectations.

Analysts had expected US$3.26 per share on revenue of US$12.81 billion, according to Thomson Reuters I/B/E/S.

Still, the Bethesda, Maryland-based company increased its full-year 2017 sales forecast to US$51.2 billion, from US$50 billion, citing its continued focus on operational performance and US$200 million worth of property sales.

During the quarter, Lockheed had notable wins on several large programs.

The U.S. Air Force awarded one of two US$900-million contracts to continue development work on a replacement for the air-launched nuclear cruise missile. And the U.S. State Department approved the possible sale of a THAAD anti-missile defense system to Saudi Arabia at an estimated cost of US$15 billion.

Lockheed said that it was in the process of hiring 1,000 engineers for programs won in 2017.

Still, the company's raised sales outlook for 2018 came with caveats as it included a drop in projected cash flow compared with 2017. The company said materials costs for the F-35 multi-year "block buy" would go up in 2018 and capital investments would be made in facilities for the Space Systems division.

The company sees 2017 ending with diluted higher earnings per share between US$12.85 and US$13.15, up from its previous estimate of US$12.30 to US$12.60 per share. In addition, Lockheed said it would raise its quarterly dividend rate by 10 per cent to US$2.00 per share.

Lockheed shares were down 2.7 per cent at US$312.15 in afternoon trading. Despite Tuesday's drop, Lockheed shares trade near record highs and have more than tripled in the last five years.