Lockheed Martin is benefiting from exceptionally high demand and a record order backlog. At the same time, margins and balance-sheet flexibility have deteriorated compared with the stronger years. After the share price rise in 2026, the stock has already priced in part of the expected operating recovery.
1. Quick Overview
Lockheed Martin develops and produces military aircraft, missiles, radar systems, helicopters, satellites and integrated defence systems. The group primarily works for the US government, the US Department of Defense and allied states.
| Metric | Value |
|---|---|
| Name | Lockheed Martin Corporation |
| Ticker | LMT |
| WKN | 894648 |
| ISIN | US5398301094 |
| Country | USA |
| Sector | Industrials |
| Industry | Aerospace & Defense |
| Market capitalization | approx. USD 138.0 billion |
| Dividend yield | approx. 2.3% |
| P/E (TTM) | approx. 22.0 |
| P/S (TTM) | approx. 1.8 |
The master data comes from Deutsche Börse; the current valuation metrics are based on the latest available market data from August 13, 2026.
2. Company Profile
2.1 History & Founding
Lockheed Martin’s roots go back to 1912. Glenn L. Martin founded the Martin Company at the time, while Allan and Malcolm Lockheed built the later Lockheed Aircraft Company in the same year. Over the decades, both companies developed into major aerospace and defence groups.
The present-day company was created on March 15, 1995, through the merger of Lockheed and Martin Marietta. The merger was a response to falling US defence spending after the end of the Cold War. The industry had to consolidate, cut costs and manage larger programmes with fewer customers.
This background explains the group’s current position. Lockheed Martin has decades-long relationships with government agencies, large development divisions and an installed base of systems that is difficult to replace at short notice.
2.2 Business Model
Lockheed Martin operates in four business segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space.
With revenue of around USD 30.3 billion in 2025, Aeronautics is the largest segment. It includes the F-35, F-16 programmes, military transport aircraft and unmanned systems, among other areas. The segment accounted for around 40% of group revenue in 2025.
Missiles and Fire Control generated around USD 14.5 billion in revenue in 2025. This segment covers missile defence, precision weapons, tactical missiles and ground-based defence systems. It is currently benefiting particularly from higher production volumes for PAC-3, THAAD and other missile programmes.
Rotary and Mission Systems includes helicopters, naval and undersea systems, radars, cybersecurity and integrated command-and-control systems. Space supplies satellites, missile-warning systems and strategic space systems.
The economic speciality lies in the long duration of many programmes. New systems are developed, produced, maintained and modernised over many years. This creates high revenue visibility. It does not fully protect against problems, however: fixed-price contracts, technical delays, cost increases and subsequent revaluations can place significant pressure on the margin of individual programmes.
2.3 Industry & Segments (GICS)
Under GICS, Lockheed Martin belongs to the Industrials sector and the Aerospace & Defense industry. This classification is more appropriate than a purely technology-based classification, even though the group works with artificial intelligence, sensors, software and autonomous systems in many areas.
The four segments provide a certain degree of diversification. The company nevertheless remains heavily dependent on government customers. Changes in the US defence budget, political priorities, budget disputes or new procurement rules therefore have a direct impact on the business model.
The 2025 revenue distribution shows the weighting: Aeronautics around 40%, Missiles and Fire Control around 19%, Rotary and Mission Systems around 23%, and Space around 17%.
3. Historical Share Price Performance
The Lockheed Martin share price rose significantly in 2021 and 2022 before correcting in 2023 and moving largely sideways in 2024 and 2025. For a long time, the market rewarded the high dividend, stable government contracts and strong cash flow. At the same time, it became increasingly apparent that individual programmes could weigh on the operating margin.
The share price began moving again in 2026. On June 22, the stock was still at USD 493.60. After better-than-expected quarterly figures on July 23, the share price jumped around 10.5% that day to USD 568.59. On August 13, the stock closed at USD 598.01. It was therefore around 24% above the closing price at the end of 2025.
The share price performance shows a clear change in sentiment. The market is no longer valuing Lockheed Martin solely on the basis of the weak margins in 2025, but also on the basis of the expected recovery in the missile and defence business. This increases the pressure on the coming quarters. If the operating improvement fails to materialise, not only will the profit be absent, but so will the justification for the higher valuation.
Lockheed Martin USD
Interactive price history chart for Lockheed Martin USD (USD).
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4. Fundamental Analysis
4.1 Earnings Performance – Last Five Fiscal Years
Lockheed Martin has grown over the past five years, but not with consistent quality. Revenue increased while profit margins and returns on capital declined significantly at times.
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | USD 67.04 billion | USD 65.98 billion | USD 67.57 billion | USD 71.04 billion | USD 75.05 billion |
| Revenue growth | 2.5% | -1.6% | 2.4% | 5.1% | 5.6% |
| EBIT | USD 9.06 billion | USD 8.39 billion | USD 8.57 billion | USD 7.02 billion | USD 7.69 billion |
| EBIT margin | 13.5% | 12.7% | 12.7% | 9.9% | 10.2% |
| Net income | USD 6.32 billion | USD 5.73 billion | USD 6.92 billion | USD 5.34 billion | USD 5.02 billion |
| Net margin | 9.4% | 8.7% | 10.2% | 7.5% | 6.7% |
| Diluted EPS | USD 22.80 | USD 21.63 | USD 27.57 | USD 22.31 | USD 21.49 |
| Free cash flow | USD 7.70 billion | USD 5.52 billion | USD 6.37 billion | USD 5.80 billion | USD 7.66 billion |
| Dividend yield | 2.99% | 2.35% | 2.69% | 2.64% | 2.78% |
Revenue increased by around 12% between 2021 and 2025. That is solid for an already enormous defence group, but it is not exceptional growth. Revenue even contracted slightly in 2022 before higher production volumes and new programmes accelerated the development again.
Earnings performance was weaker. The EBIT margin fell from 13.5% in 2021 to 9.9% in 2024. It recovered slightly to 10.2% in 2025. Net income in 2025 was nevertheless still well below the 2023 figure. Among other things, Lockheed Martin had to absorb a pension charge and losses on individual programmes. The official annual report shows around USD 5.0 billion in net income and earnings per share of USD 21.49 for 2025.
The earnings series looks better again in 2026. For the past twelve months, StockAnalysis reports revenue of USD 77.01 billion, net income of USD 6.29 billion, earnings per share of USD 27.14 and free cash flow of USD 8.73 billion. This explains why the current P/E ratio has not risen more sharply despite the share price increase.
For the table, free cash flow was calculated as operating cash flow less investments in property, plant and equipment and intangible assets. The SimFin DERIVED series differs from this. Lockheed Martin’s official figure for 2025 was around USD 6.9 billion after a pension payment. The figures are therefore not defined on completely identical bases.
Revenue and Net Income
Show data table
| Zeitraum | Revenue (Mrd. USD) | Net Income (Mrd. USD) |
|---|---|---|
| FY 2019 | 59.81 | 6.23 |
| FY 2020 | 65.40 | 6.83 |
| FY 2021 | 67.04 | 6.32 |
| FY 2022 | 65.98 | 5.73 |
| FY 2023 | 67.57 | 6.92 |
| FY 2024 | 71.04 | 5.34 |
| FY 2025 | 75.05 | 5.02 |
4.2 Balance-Sheet Quality and Returns on Capital – Last Five Fiscal Years
The balance sheet is not weak, but it has developed less comfortably than the order backlog. Total assets increased, while cash and equity remain low relative to total assets.
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Total assets | USD 50.87 billion | USD 52.88 billion | USD 52.46 billion | USD 55.62 billion | USD 59.84 billion |
| Cash and cash equivalents | USD 3.60 billion | USD 2.55 billion | USD 1.44 billion | USD 2.48 billion | USD 4.12 billion |
| Total current assets | USD 19.82 billion | USD 20.99 billion | USD 20.52 billion | USD 21.85 billion | USD 25.36 billion |
| Long-term debt | USD 11.67 billion | USD 15.43 billion | USD 17.29 billion | USD 19.63 billion | USD 20.53 billion |
| Total equity | USD 10.96 billion | USD 9.27 billion | USD 6.84 billion | USD 6.33 billion | USD 6.72 billion |
Total assets increased from USD 50.87 billion to USD 59.84 billion. In 2025, cash and cash equivalents of USD 4.12 billion were again well above the 2023 low. Operating cash flow helps Lockheed Martin stabilise the balance sheet despite high distributions and share buybacks.
The development of long-term debt is less comfortable. It increased from USD 11.67 billion to USD 20.53 billion. At the same time, equity declined from USD 10.96 billion to USD 6.72 billion. This is also due to extensive share buybacks and negative items in other equity. The result is that ROE looks very high, but measures not only operating quality, but also the small equity base.
The development of returns on capital and liquidity metrics therefore paints a more differentiated picture.
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| ROE (adj.) | 57.6% | 60.8% | 99.9% | 82.9% | 73.7% |
| ROA (adj.) | 12.4% | 10.7% | 13.0% | 9.4% | 8.3% |
| ROIC | 25.1% | 23.3% | 27.7% | 22.6% | 21.5% |
| Current ratio | 1.42 | 1.32 | 1.21 | 1.13 | 1.09 |
| Net debt/EBITDA | 0.77 | 1.33 | 1.60 | 2.07 | 1.88 |
Adjusted ROIC remains high at 21.5%, but is clearly below the levels of 2021 and 2023. Lockheed Martin continues to earn good money on the capital employed. The return is no longer as strong, however, as in the years when the major programmes were particularly profitable.
The ROE of 73.7% should not be read in isolation as evidence of exceptional quality. Equity is low relative to total assets. As a result, even a moderate net income can generate a high return on equity. The current TTM ROE of around 89% is for the same reason only comparable to a limited extent with more capital-intensive companies.
The net debt/EBITDA ratio of 1.88 is still manageable. Net debt was around USD 17.6 billion at the end of 2025. The calculated free cash flow of USD 7.66 billion would mathematically cover this net debt in just over two years. The buffer therefore exists, but the balance sheet is not debt-free. A longer period of weak margins would restrict flexibility for buybacks and dividends.
For private investors, this means that the high return on capital is a positive point, but it must not be viewed without considering the equity base, debt and contract risks. With Lockheed Martin, it is not only important how much profit is generated, but also how stable it remains after programme adjustments and investments.
4.3 Dividend and Payout Policy – Last Five Fiscal Years
Lockheed Martin has paid a regular dividend for many years and increased the distribution to USD 3.45 per quarter in 2026. The dividend is an important part of the return, but it is no substitute for operating improvement.
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Dividend per share | USD 10.65 | USD 11.42 | USD 12.22 | USD 12.84 | USD 13.46 |
| Payout ratio | 46.6% | 52.6% | 44.2% | 57.3% | 62.4% |
The payout ratio rose to around 62% in 2025. This is still sustainable, but leaves less room than in 2021 or 2023. The officially paid dividend was USD 13.35 per share in 2025. For 2026, four quarterly payments of USD 3.45 each result in an annualised dividend of USD 13.80. At a share price of USD 598.01, that corresponds to around 2.3%.
5. Valuation Analysis
After the share price increase in 2026, the stock is not a classic bargain. The valuation remains justifiable because of the expected recovery in earnings and cash flow.
| Metric | Value |
|---|---|
| P/E (TTM) | approx. 22.0 |
| Forward P/E | approx. 19.3 |
| P/S (TTM) | approx. 1.8 |
| EV/Sales | approx. 2.0 |
| ROE (current) | approx. 89% TTM, distorted by the small equity base |
| Dividend per share (last completed fiscal year) | USD 13.35 |
A P/E ratio of around 22 is not low for an established defence group. The stock is therefore trading at roughly the valuation level also visible at the end of 2022, 2024 and 2025. The valuation premium is clearly higher than in the cheaper years 2021 and 2023.
The forward P/E of around 19 assumes that the earnings improvement will actually occur. Lockheed Martin expects diluted earnings per share of around USD 29.95 to USD 30.65 for 2026. The market is therefore not only paying for today’s earnings, but also for a large part of the announced recovery.
A P/S ratio of 1.8 and an EV/Sales ratio of around 2 appear moderate at first glance. With a defence group, however, it matters more how much of the revenue remains as profit after programme risks, material costs, pensions and contract adjustments. A low revenue multiple therefore does not automatically protect against margin problems.
The current price-to-book ratio is around 15.7. Because of the small equity base and share buybacks, this figure is informative only to a limited extent. It does show, however, that the stock market values Lockheed Martin not because of a large balance-sheet safety buffer, but because of future profits and cash flows.
For private investors, the stock therefore looks like a financially strong quality and cash-flow company with the recovery already largely priced in. The share price is not speculatively high like that of an unprofitable growth company. But it also offers little protection if the operating recovery falls short of the forecast.
6. Opportunities and Risks
6.1 Opportunities
- The order backlog of USD 230 billion is more than three times 2025 revenue. This creates high revenue visibility, even though an order backlog does not automatically mean profit.
- Missiles and Fire Control is benefiting from rising production volumes for PAC-3, THAAD and the Precision Strike Missile. In the second quarter of 2026, segment revenue increased by 19% and operating profit by 24%.
- The modernisation of air defence and missile inventories is creating additional demand from the US and allied states.
- Lockheed Martin has long-standing customer relationships, complex approvals and a large installed base. These factors make it difficult for new competitors to displace the group at short notice.
- The combination of dividends, share buybacks and free cash flow generates returns even if revenue growth is not exceptionally high.
6.2 Risks
- Margins and returns on capital were well below their best years in 2025. The recovery in 2026 must show whether this is a lasting improvement or merely a favourable comparison with the weak prior year.
- Fixed-price contracts and technical delays can place significant pressure on individual programmes. Losses in helicopter and classified programmes in 2024 and 2025 showed how quickly earnings can change.
- Dependence on US government contracts makes Lockheed Martin vulnerable to budget disputes, new procurement rules, political priorities and possible budget cuts.
- A P/E ratio of around 22 and a share price increase of around 24% since the beginning of 2026 leave little room for disappointing forecasts.
- Net debt has increased while the equity base remains low. With weaker cash flows, management would have to weigh buybacks and distributions more carefully against capital requirements.
7. Conclusion and Assessment
Lockheed Martin has an exceptionally strong market position. The order backlog is high, demand for missile and defence systems is growing, and the second-quarter report for 2026 shows clear operating improvement. This is complemented by resilient cash flow and a dividend that has risen for many years.
The weaknesses lie in margins, contract risks and balance-sheet buffers. The high ROE looks impressive, but is amplified by the low equity base. At the same time, with a P/E ratio of 22 and a forward P/E below 20, the stock is no longer cheaply valued.
For the editorial assessment, Lockheed Martin therefore remains a financially robust defence group whose recovery has already largely been anticipated by the stock market. The stock is interesting in terms of quality, but the safety buffer is not in the share price. It must come from further rising cash flows, stable margins and successful execution of the major defence programmes.
This analysis is intended solely for editorial information purposes and does not constitute investment advice, a recommendation to buy or an invitation to trade securities. Despite careful preparation, no guarantee can be given as to the timeliness, completeness or accuracy of the information. Market-related metrics such as market capitalisation, dividend yield, P/E, P/S or EV/Sales should in particular be verified again with current data before publication or an investment decision.
What exactly does Lockheed Martin do?
Lockheed Martin develops and manufactures military aircraft, missiles, radar systems, helicopters, satellites, and integrated defense solutions. Its most important customer is the U.S. government.
Why is Lockheed Martin’s order backlog so important?
The order backlog of around USD 230 billion provides high revenue visibility. It shows that many programs have already been contracted. However, it does not automatically guarantee a certain profit margin.
Does Lockheed Martin pay a dividend?
Yes. The annualized dividend in 2026 is USD 13.80 per share. At a share price of around USD 598, this corresponds to a dividend yield of approximately 2.3%.
How have margins developed?
The EBIT margin declined from 13.5% in 2021 to 9.9% in 2024 and recovered slightly to 10.2% in 2025. In 2026, the quarterly results indicate stronger operating performance.
Is Lockheed Martin stock cheaply valued?
It does not appear cheap. The P/E ratio is around 22, while the forward P/E ratio is approximately 19. The valuation assumes that revenue, earnings, and free cash flow will continue to grow in 2026.
Is Lockheed Martin’s balance sheet solid?
The balance sheet is manageable, but not particularly conservative. Net debt stands at around USD 17.6 billion, while cash and cash equivalents amount to approximately USD 4.1 billion.
What is the biggest risk for the stock?
The biggest risk is a combination of a high valuation and disappointing program execution. If margins or cash flows fall short of expectations, the market could quickly question the current premium.
Note: This analysis is for informational purposes only and does not constitute investment advice. Investing in stocks involves risks.
