Key Stats for Lockheed Martin Stock
- Price Change for Lockheed Martin stock: -5%
- $LMT Share Price as of Jan. 7: $497
- 52-Week High: $539
- $LMT Share Price Target: $525
Now Live: Discover how much upside your favorite stocks could have using TIKR’s new Valuation Model (It’s free)>>>
What Happened?
Lockheed Martin (LMT) stock tumbled nearly 5% on Wednesday after President Trump issued a series of posts on Truth Social announcing plans to restrict how defense contractors spend their money.
The president said he wants to ban defense companies from paying dividends and buying back stock until they can deliver “superior products, on time and on budget.” Trump argued that these companies are spending “massive” amounts of capital on shareholder returns instead of investing in faster production.
“MILITARY EQUIPMENT IS NOT BEING MADE FAST ENOUGH!” Trump wrote. “It must be built now with the dividends, stock buybacks, and Over Compensation of Executives, rather than borrowing from Financial Institutions, or getting the money from your Government.”
Trump specifically called out Raytheon by name in his posts and claimed the situation “will no longer be allowed or tolerated.”
The announcement triggered a selloff across the entire defense sector. LMT stock fell alongside peers as investors gauged the potential impact on shareholder returns.
Lockheed Martin currently returns about $6 billion annually to shareholders through dividends and share buybacks, split roughly evenly between the two. The company has increased its dividend for 23 consecutive years and maintains an industry-leading dividend yield of almost 3%.
Despite the recent pullback, LMT stock offers upside potential, according to our valuation model. Given a forward earnings multiple of 17x, Lockheed Martin stock could return almost 9% annually over the next two years.
See analysts’ growth forecasts and price targets for LMT stock (It’s free!) >>>
What the Market Is Telling Us About LMT Stock
The decline in LMT stock shows investors are worried about Trump’s proposal, even though the president doesn’t have the legal authority to unilaterally ban dividends or buybacks.
However, the concern isn’t entirely unfounded. Trump’s comments signal that his administration views defense contractors as prioritizing shareholder returns over production speed. This perspective could influence future contract negotiations or lead to legislative pressure on the industry.
During a recent Goldman Sachs conference, Lockheed Martin CFO Evan Scott emphasized the company’s commitment to shareholder returns and its strong financial position. The company expects to generate significant free cash flow while maintaining a record backlog of $179 billion, which has grown 30% over the past four years.
Scott also discussed new acquisition models where the Department of Defense is asking contractors to invest more upfront capital in exchange for longer-term demand guarantees. He noted that while these changes add some risk, the customer “understands the dynamics that we have as a private company, the importance of shareholder value, the importance of cash timing.”
Most analysts believe Trump’s proposal will face stiff resistance from company executives, shareholders, and influential politicians on both sides of the aisle.
Defense spending has strong bipartisan support, and forcing companies to eliminate shareholder returns would likely discourage private capital investment in the sector.
Still, the fact that LMT stock and its peers sold off so sharply suggests the market is taking the threat seriously, at least in the short term. Whether this becomes actual policy or remains political rhetoric will be crucial for the defense sector going forward.
Estimate a company’s fair value instantly (Free with TIKR) >>>
How Much Upside Does LMT Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
See a stock’s true value in under 60 seconds (Free with TIKR) >>>
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
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!
