From Short-Term Struggles to Long-Term Wins: Lockheed's Space Story

Rising global demand for satellite-based communications, Earth observation and cybersecurity systems, along with increasing government investments in space exploration and space-based defense programs, has been driving the space technology market in recent times. This trend has proved to be beneficial for Lockheed Martin's (LMT) Space segment, fueling its growth through major contracts involving satellite manufacturing as well as missile-defense programs that depend on space technologies.

Interestingly, Lockheed’s space business unit, apart from offering mission-integrated space capabilities, is deeply involved in designing, building and testing lunar and deep space exploration capabilities. As a result, in addition to securing contracts from the U.S. government for space-based defense solutions, this segment of Lockheed clinches awards for varied space capabilities ranging from spacecraft used in Mars exploration, like Viking Lander, to weather satellites like GOES-R.

Consequently, the space business segment has been registering solid revenue growth in recent times, as evident from the 4% top-line expansion in the second quarter of 2025.

However, one must not forget that before the second quarter, Lockheed’s Space segment saw declining revenues for multiple quarters in 2024 and early 2025, primarily due to lower volumes on key programs. For instance, Space segment sales dropped 2% year over year in first-quarter 2025 and 13% in fourth-quarter 2024, caused by slower production in Next Gen OPIR satellites and NASA’s delays in the Orion program.

To that end, we must note that in the near-term, LMT’s Space segment will continue to face some challenges with the Artemis mission delays (Artemis II to 2025, Artemis III to 2026) continuing to disrupt Orion’s revenue cadence. That said, long-term prospects for this business remain solid, supported by the U.S. Space Force’s annual demand worth more than $3 billion for Next Gen OPIR satellites, substantial funding offered for the Artemis program under the recently enacted One Big Beautiful Bill and steady classified space contracts — all positioning the segment for long-lasting growth.

Other Stocks Warranting a Look

Other defense stocks, like Boeing (BA) and L3Harris Technologies (LHX), which are heavily involved in space programs, warrant a look from investors interested in this field.

Notably, Boeing is the prime contractor for the U.S. Space Launch System (SLS) program’s core stage, upper stage, and avionics systems. Boeing-built X-37B, an uncrewed, autonomous spaceplane, has been used for multiple orbital missions by the U.S. Space Force.

On the other hand, L3Harris is involved in the Artemis II mission through its Aerojet Rocketdyne business unit, which provides the RS-25 engines that power the SLS core stage. The company has supported more than 2,100 space launches that have provided critical intelligence to the United States.

The Zacks Rundown for LMT

Shares of LMT have lost 12.3% in the year-to-date period against the industry’s 27.3% growth.

The company’s shares are trading at a discount on a relative basis, with its forward 12-month Price/Earnings being 15.67X compared with its industry’s average of 27.55X.

The Zacks Consensus Estimate for LMT’s near-term earnings has moved south in the past 60 days.

LMT currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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