Lockheed Martin Stock Down Despite Defense Growth Prospects

Lockheed Martin’s stock (LMT) has fallen 3.8% over the past three months, a smaller decline than the 7.7% drop seen in the broader Zacks Aerospace-Defense industry. The company’s strong backlog, expanding munitions capacity, and alignment with U.S. defense priorities suggest resilient growth ahead. Competitors like RTX Corporation (RTX) and Boeing (BA) also underperformed, with declines of 8% and 8.8%, respectively. Boeing’s defense and space business remains promising, while RTX expects high-single-digit defense sales growth in 2026.

Lockheed Martin recently secured a production agreement for Black Hawk helicopters with the U.S. Army, covering 16 aircraft with deliveries starting in 2028. The deal allows for future expansions based on demand. Additionally, Avio USA broke ground on a new solid rocket motor manufacturing facility, which will support Lockheed’s tactical missile programs. The company is investing $8-9 billion to scale munitions production across over 20 U.S. sites, addressing supply chain challenges.

Despite these strengths, Lockheed faces challenges, including cost-estimate risks on complex programs and execution issues in aeronautics. The company’s debt-to-capital ratio stands at 70.08%, higher than the industry average of 46.7%. However, Lockheed’s forward price-to-sales ratio of 1.39X suggests it is trading at a discount compared to peers.

The Zacks Consensus Estimate projects Lockheed’s 2026 earnings per share (EPS) to grow 31.7%, with a long-term growth rate of 15.13%. RTX and Boeing are expected to see EPS growth of 14.8% and 91.5%, respectively. Lockheed has beaten earnings estimates in three of the last four quarters, with an average surprise of 8.85%.