Lockheed Martin Corporation

LMT · NYSE · USD

Analysis

Last 4 earnings calls · through Q2 FY2026

Lockheed stopped waiting for the Pentagon to order and started building capacity first. The payoff is a record $230 billion backlog and seven-year contracts that let it invest, hire and expand without carrying the risk on its own. How much of the $230 billion backlog turns into sales within two years?

  • The new missile deals change who carries the risk of ramping up.

    PAC-3 and THAAD are now seven-year framework agreements: fixed prices, advance payments that leave cash flow unchanged, and a clawback if Washington cuts quantities. That is what lets Lockheed fund factories before orders arrive.

  • Demand is arriving faster than the company budgeted for.

    Management raised its full-year outlook across every measure just days after the backlog hit a record $230 billion, and all four segments speed up in the second half. How much of the raised sales outlook comes from missiles versus radar?

  • The bill for the build-out lands years before the money comes back.

    Capital spending and internal research rise to nearly $5 billion this year, with more than $8 billion committed to munitions capacity. The money leaves years before the sales it pays for, which is why cash flow went negative in Q1 FY2026.

Bullish
  • Multiyear munitions agreements
    The bull case is that multiyear munitions agreements turn missile demand into funded production programs with contracted prices and protection if volumes are cut.
  • Fighter production and sustainment
    Lockheed builds the only fifth-generation fighter in production in the West, so demand for it is set by allied defense budgets rather than by rival aircraft.
  • Cash funds capacity build
    Customer prepayments and better working capital are funding the factory build-out, so the growth investment does not have to come out of the dividend or the buyback.
Bearish
  • Supplier and factory limits
    The bear case is that supply, not demand, sets the pace: rocket motors, seekers and new factory capacity take years to add before backlog becomes sales.
  • Annual appropriations risk
    The framework agreements are not binding until Congress funds them, so a continuing resolution or a change in procurement policy could slow the ramp.
  • Fixed-price development overruns
    Lockheed keeps absorbing cost overruns on fixed-price development work, and those charges have repeatedly offset profit earned in the growing missile business.
See the full bull & bear case
PoliticiansInstitutionsInsiders
PoliticianTransactionAmountTradedFiled
Donald Trump
Republican · Executive
Sale≥$100KJul 31Sep 22
Donald Trump
Republican · Executive
Purchase≥$1KJun 23Aug 22
Donald Trump
Republican · Executive
Sale≥$15KJun 16Aug 22
Donald Trump
Republican · Executive
Purchase≥$1KJun 15Aug 22
Donald Trump
Republican · Executive
Sale≥$1KMay 18Jul 1

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Product segmentsGeography
FY2025 · USD

How Lockheed Martin turned $75.0B of revenue into $7.6B of gross profit.

Revenue
Aeronautics$30.3B▲ 5.73% YoY
Rotary and Mission Systems$17.3B▲ 0.28% YoY
Missiles And Fire Control$14.4B▲ 13.94% YoY
Space$13.0B▲ 4.41% YoY
Total revenue$75.0B
Gross profit$7.6B10.2%
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