Shares of Lockheed Martin (LMT Quick QuoteLMT - Free Report) have gained 9.6% following the defense giant’s better-than-expected third-quarter 2026 results on Oct. 22. The rally was driven by revenue and earnings beats, along with a record backlog count, which reached an all-time high of $292 billion. 

The backlog was boosted by a massive $52.5 billion multi-year award for PAC-3 Missile Segment Enhancement interceptors, reflecting surging global demand for missile defense systems. The company’s raised full-year forecast likely further bolstered investor sentiment, contributing to the stock’s climb. 

However, the company’s cash flow situation presented a nuanced picture. Lockheed generated $3 billion in free cash flow during the quarter, representing a 9% decline from the prior-year period’s level. As the company remains in negotiations with the U.S. government over production contracts for F-35 Lots 20 and higher, Lockheed’s future cash flow may suffer a decline if additional funding is not received.

Against this backdrop, investors might want to consider exchange-traded funds (ETFs) with substantial exposure to Lockheed Martin as an alternative to investing directly in the stock. 

These ETFs will offer an opportunity to benefit from a potential rally in LMT stock, driven by geopolitical tensions and a seemingly insatiable demand for munitions and air defense, while avoiding the idiosyncratic risk and sharp volatility associated with a single-stock position.

Before exploring the best ETF options for gaining exposure to Lockheed Martin, let us take a closer look at the company’s third-quarter performance across key operational metrics and assess how the market, particularly credit rating agencies, responded to its results.

A Look at LMT’s Q3 Earnings

The company’s third-quarter earnings of $7.97 beat the Zacks consensus estimate by 6.4%, while its sales of $20.7 billion topped the consensus mark by 1.4%. On a year-over-year basis, both revenues and earnings recorded double-digit growth.  

The sales growth was driven by higher volume across every segment, including F-35 production and sustainment at Aeronautics, MFC munitions production ramps, new radar awards at the RMS unit, and growth in Fleet Ballistic Missile and Next-Generation Interceptor at the Space segment. 

Its backlog increased $113 billion compared with the prior-year period’s level.

LMT has raised its 2026 sales guidance to $80-$82 billion, the midpoint of which reflects year-over-year growth of 8%, but stands lower than the consensus estimate of $81.07 billion. The year-over-year increase in the top line is expected to be driven by higher volume in LMT’s

MFC unit as a result of munition ramp-ups and continued strength across the company’s portfolio as a whole. 

Lockheed Martin's space team has recently completed a key solid rocket motor test for the next-generation interceptor program, keeping that program on track for fielding by 2030 while strengthening homeland missile defense and advancing a capability considered essential to the nation's future (as reported by LMT on its third-quarter conference call). 

Moreover, the recent expansion of its Grand Prairie, TX, manufacturing footprint to more than 735,000 square feet includes additional capability and capacity for automation and digital manufacturing. This facility will also bring on board a Hadrian highly automated production machine cell to supply components across its missile programs under a manufacturing-as-a-service contract.

Such initiatives should continue to boost LMT’s position in the defense industry, offering solid growth potential. 

However, Lockheed’s rising capital expenditure, which rose 15.2%, remains a cause of concern for investors as it continues to squeeze the company's free cash flow (FCF) in the near term. 

Market Reaction

Following LMT’s third-quarter 2026 results, RBC Capital raised its price target on Lockheed Martin to $600 from $550 while maintaining a 'Sector Perform' rating, citing strong bookings and encouraging initial commentary on 2027. Citi analyst John Godyn also raised his price target for LMT to $706 from $691 and maintained a 'Buy' rating (as seen on Yahoo Finance).  

Lockheed-Heavy ETFs to Buy

Given these developments, the following ETFs could appeal to investors seeking to capitalize on Lockheed Martin’s growth potential while mitigating the risks associated with investing in a single stock:

Invesco Aerospace & Defense ETF (PPA Quick QuotePPA - Free Report)

This fund, with a market value of $7.28 billion, includes 68 companies involved in the development, manufacture, operation, and support of U.S. defense, military, national/homeland security and government space operations. LMT enjoys the first spot in this fund, holding 9.54% of its assets. 

PPA charges 58 basis points (bps) in fees and traded at a volume of 0.22 million shares in the last trading session. 

Global X Defense Tech ETF (SHLD Quick QuoteSHLD - Free Report)

This fund, with net assets worth $6.45 billion, offers exposure to 50 companies that build and manage cybersecurity systems, utilize artificial intelligence and big data, and build advanced military systems and hardware such as robotics, fuel systems, and aircrafts for defense applications. LMT enjoys the second spot in this fund, holding 9.51% of its assets. 

SHLD charges 50 bps in fees and traded at a volume of 0.72 million shares in the last trading session. 

U.S. Defense ETF (DUTY Quick QuoteDUTY - Free Report)

This fund, with net asset value of $27.87, includes 52 companies positioned to benefit from increased spending on traditional and modern defense technologies. LMT enjoys the second spot in this fund, holding 8.35% of its assets. 

DUTY charges 45 bps in fees and traded at a volume of 0.001 million shares in the last trading session. 

iShares U.S. Aerospace & Defense ETF (ITA Quick QuoteITA - Free Report)

This fund, with net assets worth $11.78 billion, offers exposure to 50 domestic aerospace and defense companies, including manufacturers of commercial and military aircraft. LMT enjoys the fourth spot in this fund, holding 5.59% of its assets. 

ITA charges 37 bps in fees and traded at a volume of 0.85 million shares in the last trading session.