LMT Stock Surges 43.6% in 3 Month: Time to Hold or Book Profits?

Lockheed Martin’s LMT shares have risen 43.6% in the past three months, outperforming the Zacks Aerospace-Defense industry’s growth of 12.3%. 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 programs. 
 

Along with LMT, other defense stocks like RTX Corporation RTX and Northrop Grumman NOC have also gained 20.1% and 36.2%, respectively, during the same period. RTX continues to receive ample orders for its wide range of combat-proven defense products from the Pentagon and its foreign allies. Northrop Grumman benefits from favorable budgetary attributes and a solid international presence. 

Considering Lockheed Martin’s outperformance compared with its industry, investors might be left wondering if this is a good time to add the 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.

Advantageous Factors for LMT Stock

Lockheed Martin’s broad product offerings allow it to secure major defense contracts, which, in turn, boosts its backlog count. The company was successful in clinching several notable deals in the fourth quarter of 2025. These include a contract for 18 space vehicles for its Tranche 3 Tracking Layer (TRKT3) constellation, with a potential value of more than $1 billion. It also clinched a $233 million contract to deliver IRST21 Block II systems and initial spares to the U.S. Navy and Air National Guard. 

The F-35 program continues to be a key growth program for the company’s Aeronautics business segment. This program generated approximately 27% of Lockheed Martin’s total consolidated net sales in 2025. 

The company continues to witness interest in the Aegis Ballistic Missile Defense System (Aegis) from international customers, such as Japan, Spain, the Republic of Korea and Australia. Lockheed Martin also has ongoing combat systems programs associated with different classes of surface combatant ships for customers in Canada, Chile and New Zealand.

Lockheed Martin stands to benefit from ramping up production of the upgraded S-92A+ helicopter through its subsidiary Sikorsky, as the move should drive higher aircraft sales and strengthen its presence in the global heavy-lift helicopter market. Increased production enables the company to meet new orders, including demand from the government.

Challenges Faced by LMT Stock

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 1.12% over the past 60 days. LMT’s long-term (three to five years) earnings growth rate is 18.57%.
 

The Zacks Consensus Estimate for RTX’s 2026 EPS has increased 1.49% over the past 60 days. NOC’s long-term earnings growth rate is 10.16%. The Zacks Consensus Estimate for Northrop Grumman’s 2026 EPS has declined 2.05% over the past 60 days. NOC’s long-term earnings growth rate is 4.8%.

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 1.96X, a discount to the industry’s average of 2.78X. This suggests that investors will be paying a lower price than the company's expected sales growth compared with its peer group.

What Should an Investor Do Now?

Lockheed Martin benefits from its broad portfolio of advanced defense systems, which helps it secure major contracts and maintain a strong order backlog. Key programs across space, aeronautics and naval defense continue to support growth. Additionally, increased production of the upgraded S-92A+ helicopter through its Sikorsky unit is expected to boost aircraft sales and strengthen its presence in the global heavy-lift helicopter market.

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.
 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research