Lockheed Martin Stock Rises 13.7% in a Month: Here's How to Play

Lockheed Martin’s LMT shares have risen 13.7% over the past month, outperforming the Zacks Aerospace-Defense industry’s growth of 3.6%. The company remains one of the largest U.S. defense contractors with a steady order flow from the Pentagon and other U.S. allies.
 

Other defense stocks, such as The Boeing Company BA and Northrop Grumman NOC, have also outperformed the industry during the same period. Shares of Boeing and Northrop Grumman have risen 16.6% and 9.2%, respectively, during the same time frame.

Let's examine the factors and assess the stock's investment prospects to make an informed decision.

Factors Acting in Favor of LMT

Lockheed Martin is one of the largest U.S. defense contractors with a platform-centric focus that guarantees a steady inflow of follow-on orders from a leveraged presence in the Army, Air Force, Navy and IT program. The company stands to benefit from the rising U.S. defense budget. President Trump proposed raising military spending to about $1.5 trillion in 2027, up from $901 billion in 2026. 

In January 2026, Lockheed Martin and the U.S. Government reached a historic deal to turbo???charge PAC-3® Missile Segment Enhancement (“MSE”) production for the United States and its allies. The company will benefit from this agreement through higher and more predictable revenues, as the deal significantly ramps up missile output to meet the rising U.S. and allied air- and missile-defense demand.

Lockheed Martin stands to benefit from the record-breaking F-35 deliveries and combat performance in 2025 because this boosts revenues and strengthens long-term production demand. The delivery of a record 191 F-35 fighter jets reflects sustained global demand and increasing program maturity, reinforcing the company’s leadership position in the global defense market. Higher deliveries also expand the global F-35 fleet, deepen international partnerships, and support further maintenance and upgrade contracts. 

In December 2025, the Space Development Agency (“SDA”) awarded Lockheed Martin a contract for 18 space vehicles for its Tranche 3 Tracking Layer constellation, with a potential value of more than $1 billion. This contract expands Lockheed Martin’s role in the SDA’s Proliferated Warfighter Space Architecture, reinforcing its position as a key supplier of space-based missile detection, tracking, and defense capabilities against advanced threats, including hypersonic weapons. This supports a growing backlog of space defense work, enhancing financial stability and technological leadership.

Challenges Faced by LMT

Lockheed Martin experienced performance issues on a classified fixed-price incentive fee contract in its Aeronautics business segment and periodically recognized reach-forward losses. During the first nine months of 2025, the company recorded losses of $950 million on this program. It also reported losses of $570 million on the Canadian Maritime Helicopter Program, $95 million on the Turkish Utility Helicopter Program at its RMS business segment and $105 million of unfavorable profit adjustments on C-130 programs at its Aeronautics business segment.

Estimates for LMT Stock

The Zacks Consensus Estimate for 2026 earnings per share (EPS) indicates a decrease of 0.17% over the past 60 days. LMT’s long-term (three to five years) earnings growth rate is 11.85%.
 

The Zacks Consensus Estimate for Boeing’s 2026 EPS indicates a decrease of 21.13% over the past 60 days. BA’s long-term earnings growth rate is 31.33%. The consensus estimate for Northrop Grumman’s 2026 EPS indicates an increase of 0.17% over the past 60 days. NOC’s long-term earnings growth rate is 4.28%.

LMT’s Earnings Surprise History

The company beat on earnings in each of the trailing four quarters, delivering an average surprise of 13.29%.

LMT Stock’s ROIC

The image below shows that Lockheed Martin’s trailing 12-month return on invested capital (ROIC) beats the peer group’s average. This suggests that the company's investments are yielding sufficient returns to cover its expenses.

LMT Stock Trades at a Discount

In terms of valuation, LMT’s forward 12-month price-to-sales (P/S) is 1.64X, a discount to the industry’s average of 2.72X. This suggests that investors will be paying a lower price than the company's expected sales growth compared with that of its peer group.

What Should an Investor Do?

Lockheed Martin’s platform-centric defense portfolio ensures steady follow-on orders across major U.S. military branches and IT programs. The January 2026 PAC-3 MSE production deal boosts missile output, driving higher, more predictable revenues amid rising U.S. and allied air- and missile-defense demand. Record delivery of 191 F-35 jets in 2025 underscores strong global demand, supporting long-term production, sustainment and upgrade revenues.

However, considering its financial pressures and declining earnings estimates, new investors should wait and look for a better entry point. Those who already have this Zacks Rank #3 (Hold) stock in their portfolio may continue to retain it, considering the company’s impressive long-term growth projection and better ROIC. 

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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