Is LMT Stock a Buy, Hold or Sell After 17.8% Rise in a Month?

Lockheed Martin’s LMT shares have risen 17.8% in the past month, outperforming the Zacks Aerospace-Defense industry’s growth of 4%. With a strong presence across the Army, Air Force, Navy and defense IT programs, Lockheed Martin benefits from high switching costs and long-term government commitments, ensuring a steady stream of follow-on orders and predictable revenues over time.
 

Along with LMT, other defense stocks like Northrop Grumman NOC and General Dynamics GD also stand to benefit from the rising U.S. defense budget. Shares of Northrop Grumman have risen 12.9% while those of General Dynamics have declined 0.5% during the same time frame.

Considering Lockheed Martin’s outperformance compared with its industry, investors might be left wondering if this is a good time to add LMT stock to their portfolio. Let's examine the factors that contributed to the share price gain 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. In January 2026, President Trump proposed raising military spending to about $1.5 trillion in 2027, up from $901 billion in 2026. 

In February 2026, the U.S. government awarded Lockheed Martin a $328.5 million Foreign Military Sales (“FMS”) contract for the production of IRST21 Legion-ES sensor systems. The contract strengthens LMT’s position in advanced infrared sensing technology, reinforcing its role as a key supplier of next-generation threat detection systems for fighter aircraft. It also expands the company’s footprint in international defense markets. 

During the same time, Lockheed Martin announced a collaboration with Fujitsu to accelerate technology development in several critical areas. LMT has gained access to Fujitsu’s advanced capabilities, which can speed innovation and enhance performance in future defense systems. The partnership broadens LMT’s technological leadership, strengthens its competitive position, and helps it develop cutting-edge tools. 

The F-35 program continues to be a key growth driver for the company’s Aeronautics business segment. This program generated approximately 27% of LMT’s total consolidated net sales in 2025. The company has delivered 1,293 F-35 airplanes since the program's inception, with 368 jets in the backlog as of Dec 31, 2025. This surely boosts expectation for the Aeronautics business segment’s sales, which improved 6.4% year over year in the fourth quarter of 2025.

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 2025, the company recorded losses of $950 million on this program. It also reported losses of $570 million in the Canadian Maritime Helicopter Program, $95 million in the Turkish Utility Helicopter Program at its RMS business segment and $140 million of unfavorable profit adjustments on C-130 programs at its Aeronautics business segment. The company may incur additional losses in future periods if it experiences further performance issues, increases in scope, or cost growth, which could be material to its financial results.

Estimates for LMT Stock

The Zacks Consensus Estimate for 2026 earnings per share (EPS) has risen 0.47% over the past 60 days. LMT’s long-term (three to five years) earnings growth rate is 14.69%.
 

The Zacks Consensus Estimate for Northrop Grumman’s 2026 EPS has declined 1.77% over the past 60 days. NOC’s long-term earnings growth rate is 4.8%. The consensus estimate for General Dynamics’ 2026 EPS has declined 2.74% over the past 60 days. GD’s long-term earnings growth rate is 10.3%.

LMT’s Earnings Surprise History

The company beat on earnings in each of the trailing four quarters, delivering an average surprise of 14.01%.

LMT’s Debt Position

Currently, the company’s total debt to capital is 76.35%, higher than the industry’s average of 51.29%.

LMT Stock Trades at a Discount

In terms of valuation, LMT’s forward 12-month price-to-sales (P/S) is 1.78X, a discount to the industry’s average of 2.73X. 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 benefits from its dominant, platform-centric defense portfolio, rising U.S. military spending and key contract wins, which strengthen its global reach and innovation capabilities. The F-35 program remains a major growth driver, contributing about 27% of 2025 sales, supported by a strong delivery track record, a sizable backlog and solid year-over-year growth in the Aeronautics segment.

However, considering its financial pressures and higher debt levels, 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 earnings growth projection. 

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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