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Kratos Defense vs. Lockheed Martin: Which Stock Is a Better Buy Now?
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Key Takeaways
Lockheed Martin's record $292 billion backlog and multiyear defense contracts support its growth outlook.
Kratos is expanding unmanned, hypersonic and directed-energy capabilities through two new Indiana facilities.
Earnings growth estimates and debt levels highlight key differences between the two defense stocks.
Lockheed Martin (LMT - Free Report) and Kratos Defense & Security Solutions (KTOS - Free Report) are two defense companies positioned to benefit from rising global military spending, modernization of defense capabilities and increasing demand for advanced weapons systems.
However, the two companies offer different investment opportunities. While Kratos Defense is emerging as a growth-oriented defense technology player focused on unmanned systems, hypersonics, propulsion and next-generation military technologies, Lockheed Martin is an established defense contractor with a broad portfolio of combat aircraft, missile systems, helicopters and space technologies. The key distinction is that KTOS offers exposure to emerging, high-growth defense technologies, while LMT provides the scale, established customer relationships and financial stability of a major defense contractor.
Let's compare the stocks' fundamentals to determine which one is a better investment option at present.
The Case for LMT Stock
Lockheed Martin is benefiting from rising U.S. and allied defense spending, increased inventory replenishment and growing demand for missile defense, advanced aircraft, munitions and space systems. Its diversified portfolio of established defense programs, including the F-35, PAC-3, THAAD, HIMARS, PrSM and Aegis, positions it to capitalize on these opportunities. Additional multiyear agreements for PAC-3 and the Joint Advanced Tactical Missile in the third quarter of 2026, along with international partnerships and investments in autonomous systems and artificial intelligence, further strengthen its growth prospects.
Lockheed Martin's backlog reached a record $292 billion as of Sept. 27, 2026, compared with $230 billion at the end of the second quarter, while its third-quarter book-to-bill ratio was 4.0, reflecting strong order momentum. Major awards included the multiyear PAC-3 agreement worth up to $58.6 billion, a seven-year THAAD agreement valued at $35 billion and a $4.4 billion C-130J contract. The company is investing more than $8 billion through 2030 to expand manufacturing capacity, modernize facilities and strengthen its supply chain. These investments, combined with a higher 2026 sales outlook of $80-$82 billion, should support future growth as new contracts translate into deliveries.
The Case for KTOS Stock
Kratos Defense is positioning itself in some of the fastest-developing areas of modern warfare. Its portfolio includes the XQ-58A Valkyrie unmanned combat aircraft, tactical drones, jet engines, hypersonic systems, satellite communications, microwave electronics and missile-defense technologies. Its focus on affordable, attritable unmanned aircraft is particularly important as militaries increasingly explore autonomous systems that can operate alongside conventional fighter jets. KTOS’ strategy of developing relatively affordable platforms that can be manufactured at scale could help it capture opportunities as defense forces look to expand their unmanned capabilities without relying exclusively on expensive traditional aircraft.
On Oct. 14, 2026, Kratos Defense broke ground on two new facilities in Indiana, backed by $35 million in U.S. Department of War funding and company contributions, to support AN/SPY-1 Navy radar maintenance and integration, as well as hypersonic materials and directed-energy testing. This will expand KTOS’ radar sustainment, hypersonic testing and directed-energy capabilities, potentially creating new defense contract opportunities, strengthening its relationship with the U.S. military and supporting long-term revenue growth.
How Do Zacks Estimates Compare for LMT & KTOS?
The Zacks Consensus Estimate for Lockheed Martin’s 2026 and 2027 earnings per share (EPS) indicates an increase of 32.31% and 9.46%, respectively, year over year.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Kratos Defense’s 2026 and 2027 EPS indicates an increase of 52.73% and 37.47%, respectively, year over year.
Image Source: Zacks Investment Research
Valuation for LMT & KTOS
Lockheed Martin’s shares trade at a trailing 12-month Price/Book (P/B TTM) of 14.77X compared with Kratos Defense’s 2.39X.
Image Source: Zacks Investment Research
Debt Position of LMT & KTOS
Currently, total debt to capital for Kratos Defense is nil, while that for Lockheed Martin is 67.07%.
LMT & KTOS’ Price Performance
In the past month, shares of Lockheed Martin and Kratos Defense have risen 27.6% and 1.8%, respectively.
Image Source: Zacks Investment Research
LMT & KTOS: Which Is a Better Choice Right Now?
Lockheed Martin benefits from rising global defense spending, strong demand for advanced military systems, a diversified program portfolio and a growing backlog, while multiyear contracts and capacity investments support long-term revenue visibility. Kratos Defense is targeting emerging defense opportunities in unmanned aircraft, hypersonics and autonomous systems, with new Indiana facilities expected to expand its radar, hypersonic testing and directed-energy capabilities, boosting potential for defense contracts.
Our choice at the moment is Kratos Defense, given its better earnings growth, better debt management and attractive valuation than Lockheed Martin. KTOS carries a Zacks Rank #2 (Buy) and LMT has a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
Kratos Defense vs. Lockheed Martin: Which Stock Is a Better Buy Now?
Key Takeaways
Lockheed Martin (LMT - Free Report) and Kratos Defense & Security Solutions (KTOS - Free Report) are two defense companies positioned to benefit from rising global military spending, modernization of defense capabilities and increasing demand for advanced weapons systems.
However, the two companies offer different investment opportunities. While Kratos Defense is emerging as a growth-oriented defense technology player focused on unmanned systems, hypersonics, propulsion and next-generation military technologies, Lockheed Martin is an established defense contractor with a broad portfolio of combat aircraft, missile systems, helicopters and space technologies. The key distinction is that KTOS offers exposure to emerging, high-growth defense technologies, while LMT provides the scale, established customer relationships and financial stability of a major defense contractor.
Let's compare the stocks' fundamentals to determine which one is a better investment option at present.
The Case for LMT Stock
Lockheed Martin is benefiting from rising U.S. and allied defense spending, increased inventory replenishment and growing demand for missile defense, advanced aircraft, munitions and space systems. Its diversified portfolio of established defense programs, including the F-35, PAC-3, THAAD, HIMARS, PrSM and Aegis, positions it to capitalize on these opportunities. Additional multiyear agreements for PAC-3 and the Joint Advanced Tactical Missile in the third quarter of 2026, along with international partnerships and investments in autonomous systems and artificial intelligence, further strengthen its growth prospects.
Lockheed Martin's backlog reached a record $292 billion as of Sept. 27, 2026, compared with $230 billion at the end of the second quarter, while its third-quarter book-to-bill ratio was 4.0, reflecting strong order momentum. Major awards included the multiyear PAC-3 agreement worth up to $58.6 billion, a seven-year THAAD agreement valued at $35 billion and a $4.4 billion C-130J contract. The company is investing more than $8 billion through 2030 to expand manufacturing capacity, modernize facilities and strengthen its supply chain. These investments, combined with a higher 2026 sales outlook of $80-$82 billion, should support future growth as new contracts translate into deliveries.
The Case for KTOS Stock
Kratos Defense is positioning itself in some of the fastest-developing areas of modern warfare. Its portfolio includes the XQ-58A Valkyrie unmanned combat aircraft, tactical drones, jet engines, hypersonic systems, satellite communications, microwave electronics and missile-defense technologies. Its focus on affordable, attritable unmanned aircraft is particularly important as militaries increasingly explore autonomous systems that can operate alongside conventional fighter jets. KTOS’ strategy of developing relatively affordable platforms that can be manufactured at scale could help it capture opportunities as defense forces look to expand their unmanned capabilities without relying exclusively on expensive traditional aircraft.
On Oct. 14, 2026, Kratos Defense broke ground on two new facilities in Indiana, backed by $35 million in U.S. Department of War funding and company contributions, to support AN/SPY-1 Navy radar maintenance and integration, as well as hypersonic materials and directed-energy testing. This will expand KTOS’ radar sustainment, hypersonic testing and directed-energy capabilities, potentially creating new defense contract opportunities, strengthening its relationship with the U.S. military and supporting long-term revenue growth.
How Do Zacks Estimates Compare for LMT & KTOS?
The Zacks Consensus Estimate for Lockheed Martin’s 2026 and 2027 earnings per share (EPS) indicates an increase of 32.31% and 9.46%, respectively, year over year.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Kratos Defense’s 2026 and 2027 EPS indicates an increase of 52.73% and 37.47%, respectively, year over year.
Image Source: Zacks Investment Research
Valuation for LMT & KTOS
Lockheed Martin’s shares trade at a trailing 12-month Price/Book (P/B TTM) of 14.77X compared with Kratos Defense’s 2.39X.
Image Source: Zacks Investment Research
Debt Position of LMT & KTOS
Currently, total debt to capital for Kratos Defense is nil, while that for Lockheed Martin is 67.07%.
LMT & KTOS’ Price Performance
In the past month, shares of Lockheed Martin and Kratos Defense have risen 27.6% and 1.8%, respectively.
Image Source: Zacks Investment Research
LMT & KTOS: Which Is a Better Choice Right Now?
Lockheed Martin benefits from rising global defense spending, strong demand for advanced military systems, a diversified program portfolio and a growing backlog, while multiyear contracts and capacity investments support long-term revenue visibility. Kratos Defense is targeting emerging defense opportunities in unmanned aircraft, hypersonics and autonomous systems, with new Indiana facilities expected to expand its radar, hypersonic testing and directed-energy capabilities, boosting potential for defense contracts.
Our choice at the moment is Kratos Defense, given its better earnings growth, better debt management and attractive valuation than Lockheed Martin. KTOS carries a Zacks Rank #2 (Buy) and LMT has a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.