Key Stats for LMT Stock
- Past week performance: -1.1%
- 52-week range: $437 to $692
- Valuation model target price: $716
- Implied upside: 35.0% over 2.3 years
Measure Lockheed Martin’s backlog against its own five year history (It’s free) >>>
A Record Backlog Meets a Record Order Pace
Lockheed Martin (LMT) trades well below its 52-week high, even as its business keeps setting records. The defense giant posted Q2 sales of $20.1 billion, up 11% year over year, and adjusted EPS of $7.94. Backlog climbed to an all time high of $230 billion, driven by $65 billion in new orders.
Management responded by raising full year sales guidance to $79.75 billion to $81.75 billion, up from a prior 5% growth outlook to roughly 8%. CEO Jim Taiclet said the company is “delivering on our strategy, achieving a higher trajectory for our business.”
In the past two weeks, Lockheed Martin announced a $729 million HIMARS deal with Sweden, a $950 million Australian air battle management contract, and a $114 million GPS modernization award. None of these alone moves the needle much. But together they show a company converting demand into signed paper at a steady clip.
Munitions capacity is the other undercurrent. Lockheed Martin has built ahead of contracted demand for years, and it’s now leaning into cheaper alternatives to some premium systems. Taiclet described lower cost missile variants that deliver “two-thirds of the capability” at a fraction of the price.
Going forward, demand clearly exists. The real question is whether Lockheed Martin can convert that backlog into delivered revenue fast enough to satisfy investors.
Compare Lockheed Martin’s backlog growth to its stock performance over the past year (It’s free) >>>
Is Lockheed Martin Stock Cheap Relative to Its Backlog?
Under valuation model assumptions realized through 12/31/28, the stock is modeled using:
- Revenue Growth (CAGR): 6.4%
- Operating Margins: 12.1%
- Exit P/E Multiple: 17.2x
Based on these inputs, the model estimates a target price of $716, implying 35% total upside and a 13.9% annualized return over the next 2.3 years.
A 35% total return forecast beats most large cap defense names right now. Lockheed Martin’s stock has lagged its own fundamentals this year, trading near $524 despite record backlog and repeated guidance raises.
Margins are the swing factor to watch. A 12.1% operating margin assumption sits below Lockheed Martin’s historical peak. It reflects near term dilution from munitions capacity expansion and newer, lower margin programs. Management has flagged 20 to 30 basis points of margin pressure over the next few years while it scales that buildout.
Revenue growth of 6.4% might look modest next to a 35% total return forecast. But the model also assumes the stock’s multiple, near 17x today, expands as backlog conversion plays out. A $230 billion backlog against roughly $80 billion in annual sales gives Lockheed Martin nearly three years of contracted revenue already locked in.
The case for undervaluation rests on execution, not demand. If Lockheed Martin converts backlog into cash flow at the pace management expects, the current multiple looks conservative rather than full.
How Lockheed Martin Compares to Its Defense Peers
Lockheed Martin’s closest competitors are RTX Corporation (RTX) and Northrop Grumman (NOC), both of which compete for many of the same missile defense and aerospace contracts.
On growth, Lockheed Martin’s 6.4% forecasted revenue CAGR trails RTX, which has benefited from stronger commercial aerospace aftermarket demand alongside its defense segment. Northrop Grumman has leaned more heavily into space and missile defense, areas where Lockheed Martin also competes through the Space Force’s Golden Dome interceptor program.
On margins, Lockheed Martin’s 12.1% forecast sits below RTX’s typical low teens range but ahead of Northrop Grumman’s, which has faced cost overruns on fixed price development programs. Lockheed Martin has largely avoided similar overrun headlines this cycle, a point management often credits to faster, iterative development.
Valuation wise, Lockheed Martin trades at a discount to both rivals on forward P/E. That gap partly reflects investor caution after prior pension related charges distorted earnings comparisons. But with backlog at a record $230 billion and orders arriving weekly, Lockheed Martin’s growth visibility now looks comparable to its two largest defense rivals.
What’s Driving LMT Stock Going Forward?
Backlog conversion offers the clearest catalyst. With $230 billion in signed orders, the pace of delivered revenue over coming quarters will decide whether the stock closes its gap to its 52-week high.
International demand remains a steady tailwind. NATO allies and Indo-Pacific partners keep expanding defense budgets. Recent wins in Sweden, Australia, Poland, and India show Lockheed Martin capturing broad spending, not just U.S. contracts.
Munitions capacity expansion is the medium term lever. Management’s push toward cheaper, faster missile variants could open demand among allies that can’t afford premium tier systems. Multiyear framework agreements with the Department of War aim to lock in cash neutral, long term production.
Margin recovery is the metric investors will watch closest. As munitions investments mature, management has guided toward margins returning above historic levels. Any acceleration there would strengthen the case for a re-rating toward the target price.
Should You Invest in Lockheed Martin?
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Pull up LMT, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
