Lockheed Martin’s (LMT) shares have declined about 25% since the beginning of March. The drop was driven in large part by the company’s first-quarter financial results. But the performance was largely driven by one-time items and the company’s investments, which are likely to facilitate the acceleration of its top- and bottom-line growth in the longer term. Also importantly, LMT reaffirmed its full-year financial guidance, which looks favorable, while the valuation of LMT stock is quite attractive.
Meanwhile, the firm remains well-positioned to benefit from rapidly increasing demand for its missile-defense offerings and from the Pentagon’s desire to scale up its purchases of the firm’s F-35 planes. Finally, Lockheed can also get a lift from America’s desire to step up its space exploration in the coming years.
LMT’s Q1 Results Don’t Reflect Badly on Its Fundamentals
In Q1, the company’s revenue came in at $18 billion, unchanged from the same period a year earlier, while its net income fell to $1.5 billion, down from $1.7 billion in Q1 of 2025.
But the firm had technical problems with “a new configuration” of its F-16 planes, and those difficulties delayed deliveries of several of the jets, CFO Evan Scott explained during its Q1 earnings call on April 23. However, the jets were “back on track,” he added.
Additionally, Lockheed took “one-time charges,” which cut its sales by roughly $190 million and reduced its profit by about $240 million, Scott noted. Excluding the one-time charges, its Q1 performance was “on track,” he added.
Also noteworthy is that its R&D spending jumped about 15% year-over-year to $458 million, while its capital spending also climbed 15% YOY to $511 million. The increased R&D and capital spending likely both reflect investments that will enable LMT to exploit rising demand for its products over the longer term.
Encouragingly, Lockheed continues to expect its revenue to rise about 5% this year, and it still predicts that its bottom line will jump to $8.4 billion to $8.7 billion, up from $5 billion in 2025.
Missile-Defense Demand Remains Strong, the Pentagon Wants More F-35s, and LMT Can Get a Boost from Space Exploration
Indicating that the demand for LMT’s missile-defense products remains extremely strong, the Pentagon has asked LMT to triple and quadruple its production of PAC-3 and THAAD interceptors, CEO Jim Taiclet noted on the earnings call.
What’s more, in line with the CEO’s forecast, on June 24, the firm received from Washington “a seven-year … contract … for up to $35 billion to quadruple production of Terminal High Altitude Area Defense (THAAD) interceptors.”
And earlier this year, LMT obtained a $4.8 billion deal to increase its production of PAC-3 interceptors.
Meanwhile, the Department of War has requested the procurement of 85 of LMT’s F-35s in fiscal 202, versus 47 in FY26.
Turning to space travel, Lockheed provided its Orion spacecraft for NASA’s successful space mission, and LMT is now “assembling” Orions for three more upcoming missions. Since Orions can be used for “exploration of the Moon, Mars, and beyond,” according to Taiclet, LMT is likely to provide many more spacecraft to NASA as it ramps up its activities in space.
Valuation and the Bottom Line on LMT Stock
The shares are changing hands at a forward price-to-earnings ratio of 16.8. Given the company’s expected growth and multiple positive catalysts, LMT stock is very attractive at its current levels for conservative and value investors.
*This article is intended to be informational only; it is not financial advice.
