Lockheed Martin soared 26% in October, a stark contrast to Boeing’s 8.3% decline, as investors favored defense contractors with strong fundamentals over struggling aerospace firms. The rally was driven by Lockheed’s record backlog of $292 billion, up $113 billion from last year, and a robust third-quarter performance. The company reported earnings per share of $7.97, beating estimates, and raised its full-year sales guidance to $80 billion to $82 billion. A key catalyst was a 10-year framework deal with the Pentagon for at least 850 F-35 fighter jets, worth at least $78 billion.
Lockheed’s cash flow conversion is another highlight, with free cash flow reaching $3.0 billion in the third quarter and $5.6 billion year-to-date. The company targets $7.8 billion to $8 billion in free cash flow for 2026, supporting a 24-year dividend streak. The balance sheet has also improved, with total debt falling to $20.5 billion from $22.8 billion at the end of 2025. Analysts have lifted their price targets, with the consensus now at $652.57.
The stock’s performance reflects a broader trend where institutional capital is shifting toward sectors with predictable demand and strong cash flow. Lockheed’s position in ProPicks AI’s Top Value Stocks strategy underscores its appeal as a stable investment. The company’s CEO, Jim Taiclet, cites geopolitical threats as lasting drivers of defense demand, further solidifying its investment case.