Lockheed Martin (LMT) has surged 15.5% over the past three months, outpacing the Zacks Aerospace-Defense industry’s broader gain of 12.2%.
The rally puts LMT ahead of key rivals, with General Dynamics (GD) rising 10.5% and RTX Corporation (RTX) climbing 26.1% over the same period.
Lockheed Martin’s broad portfolio of combat-proven systems, including the F-35, PAC-3, THAAD, HIMARS, and Aegis programs, continues to differentiate the company from its defense peers.
The company’s backlog reached a record $230 billion as of June 28, 2026, after booking $65 billion in second-quarter orders and achieving a 3.2 book-to-bill ratio.
That backlog includes a seven-year, $35 billion contract to quadruple THAAD interceptor production, alongside new GMLRS, HIMARS, radar, and space awards that management says will fuel sales growth for years.
On July 29, the U.S. Department of War awarded Lockheed Martin a seven-year, multiyear contract worth up to $58.62 billion to produce PAC-3 MSE Patriot interceptor missiles under its Acquisition Transformation Strategy.
That contract supports plans to triple PAC-3 MSE production by 2030 and expand employment at its Camden, Arkansas facility by roughly 50%, improving operating leverage and long-term revenue visibility.
International customers represented 28% of LMT’s 2025 sales, and the company is expanding that footprint through co-production deals, including an agreement with Rheinmetall to pursue ATACMS production in Europe.
Despite these tailwinds, Lockheed Martin carries meaningful financial risk, with total debt to capital at 70.08%, well above the industry average of 47.1%.
Execution risks on fixed-price contracts remain a concern, with Aeronautics recording $160 million of lower net favorable profit adjustments and management citing F-16 and C-130 program challenges affecting margins.
Second-quarter 2026 results benefited from the absence of the $1.6 billion in reach-forward losses recorded in the prior-year period, rather than reflecting the elimination of the underlying execution risk.
The Zacks Consensus Estimate for LMT’s 2026 earnings per share indicates year-over-year growth of 31.1%, with a long-term earnings growth rate of 19.19%, outpacing both GD and RTX on that measure.
LMT’s forward 12-month price-to-sales ratio stands at 1.64x, a notable discount to the industry average of 2.69x, suggesting the stock remains undervalued relative to projected sales growth.
Lockheed Martin beat earnings expectations in three of the past four quarters, missing once, and delivered an average earnings surprise of 8.85% across that period.
Carrying a Zacks Rank of 3 (Hold), LMT may reward existing shareholders who stay the course, but new investors would be wise to wait for a more attractive entry point given current debt levels and program execution risks.
