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LMT Trades at a Discount to the Industry: Right Time to Buy the Stock?
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Key Takeaways
Lockheed Martin's backlog reached a record $292 billion, with Q3 2026 book-to-bill at 4.0.
New defense contracts, accelerated Orion production and the Ultra Maritime acquisition support growth.
LMT offers 32.61% projected 2026 EPS growth, healthy liquidity and a forward P/S discount to peers.
Lockheed Martin’s (LMT - Free Report) shares have risen 12% over the past six months against the Zacks Aerospace-Defense industry’s decline of 8.8%. Lockheed Martin is benefiting from a favorable macro backdrop of higher U.S. and allied defense spending, inventory replenishment and growing demand for missile defense, munitions, advanced aircraft and space systems.
Image Source: Zacks Investment Research
Shares of other defense stocks, such as RTX Corporation (RTX - Free Report) and General Dynamics (GD - Free Report) , have also outperformed the industry over the aforementioned period. RTX and General Dynamics have increased 9.1% and 2.6%, respectively. RTX’s defense business remains well positioned, backed by strong bookings from the Pentagon and foreign allies. General Dynamics’ award wins, expanding backlog, global presence, defense demand and healthy liquidity should support steady growth.
Considering Lockheed Martin’s outperformance, investors might be left wondering if this is a good time to add LMT stock to their portfolio. Let's examine the factors that contributed to the share price gain and assess the stock's investment prospects to make an informed decision.
Tailwinds for LMT Stock
Lockheed Martin is converting increased demand into longer-duration awards that improve revenue visibility and support capacity planning. Backlog reached a record $292 billion as of Sept. 27, 2026, compared with $230 billion at the end of the second quarter. Third-quarter 2026 book-to-bill reached 4.0, reflecting substantial new orders. The seven-year PAC-3 agreement contributed to a multiyear contract valued at up to $58.6 billion, alongside the earlier seven-year THAAD agreement worth $35 billion.
Geopolitical tensions are driving allies to strengthen air defense, missile defense, advanced combat aircraft and maritime capabilities. This creates opportunities for established programs such as the F-35, PAC-3, THAAD and HIMARS. In the third quarter of 2026, Lockheed secured a $439 million ATACMS production contract supporting Taiwan's HIMARS launchers and an $800 million award for Australia's AIR6500 battle management program.
On Nov. 5, 2026, Lockheed Martin announced that it is accelerating the development and production of its Orion spacecraft for NASA’s Artemis III, IV and V missions. This initiative is expected to benefit Lockheed Martin by improving production efficiency, reducing manufacturing costs and delivery timelines, and strengthening its ability to execute future Orion contracts. As the prime contractor for Orion, Lockheed Martin is well positioned to capitalize on NASA's longer-term plans for sustained lunar exploration and eventual human missions to Mars, supporting growth opportunities in its Space business.
On Oct. 26, 2026, Lockheed Martin announced the completion of its $3.45 billion acquisition of Ultra Maritime, a global defense company specializing in undersea warfare and anti-submarine warfare technologies for allied naval forces. The acquisition will strengthen Lockheed Martin's Rotary and Mission Systems (“RMS”) business by expanding its existing sonar portfolio and adding advanced capabilities to detect, track and counter underwater threats. Ultra Maritime's international presence and established relationships with allied navies will also expand Lockheed Martin's reach in global defense markets.
Challenges for LMT Stock
Lockheed Martin remains exposed to cost-estimate and schedule risk on complex programs, especially under fixed-price arrangements. Although the absence of $1.6 billion in prior-year reach-forward losses supported earnings growth during the first nine months of 2026, unfavorable program adjustments continued. In the third quarter of 2026, Aeronautics recognized $40 million of higher unfavorable adjustments on each of its F-16 and C-130 programs.
Estimates for LMT Stock
The Zacks Consensus Estimate for 2026 earnings per share (EPS) indicates year-over-year growth of 32.61%. LMT’s long-term (three to five years) earnings growth rate is 15.37%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for RTX’s 2026 EPS indicates year-over-year growth of 22.1%. RTX’s long-term earnings growth rate is 11.69%. The Zacks Consensus Estimate for General Dynamics’ 2026 EPS indicates year-over-year growth of 91.5%. GD’s long-term earnings growth rate is 10.27%.
LMT’s Earnings Surprise History
The company beat on earnings in three of the trailing four quarters and missed in one, delivering an average surprise of 8%.
Image Source: Zacks Investment Research
LMT Stock’s Liquidity
The company’s current ratio is 1.26 compared with the industry’s average of 1.10. The ratio of more than one suggests a healthy liquidity position where the business can meet its immediate financial obligations without selling long-term assets.
Image Source: Zacks Investment Research
LMT Stock Trades at a Discount
In terms of valuation, LMT’s forward 12-month price-to-sales (P/S) is 1.56X, a discount to the industry’s average of 2.16X. This suggests that the stock is trading at a lower valuation relative to its projected sales growth than its peer group.
Image Source: Zacks Investment Research
What Should an Investor Do Now?
Lockheed Martin benefits from strong global defense demand, securing long-term contracts that strengthen backlog, improve revenue visibility and support production expansion across its key defense programs. Additionally, Orion production acceleration and the Ultra Maritime acquisition strengthen its Space and RMS businesses, creating opportunities in lunar exploration, undersea warfare and international defense markets.
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LMT Trades at a Discount to the Industry: Right Time to Buy the Stock?
Key Takeaways
Lockheed Martin’s (LMT - Free Report) shares have risen 12% over the past six months against the Zacks Aerospace-Defense industry’s decline of 8.8%. Lockheed Martin is benefiting from a favorable macro backdrop of higher U.S. and allied defense spending, inventory replenishment and growing demand for missile defense, munitions, advanced aircraft and space systems.
Image Source: Zacks Investment Research
Shares of other defense stocks, such as RTX Corporation (RTX - Free Report) and General Dynamics (GD - Free Report) , have also outperformed the industry over the aforementioned period. RTX and General Dynamics have increased 9.1% and 2.6%, respectively. RTX’s defense business remains well positioned, backed by strong bookings from the Pentagon and foreign allies. General Dynamics’ award wins, expanding backlog, global presence, defense demand and healthy liquidity should support steady growth.
Considering Lockheed Martin’s outperformance, investors might be left wondering if this is a good time to add LMT stock to their portfolio. Let's examine the factors that contributed to the share price gain and assess the stock's investment prospects to make an informed decision.
Tailwinds for LMT Stock
Lockheed Martin is converting increased demand into longer-duration awards that improve revenue visibility and support capacity planning. Backlog reached a record $292 billion as of Sept. 27, 2026, compared with $230 billion at the end of the second quarter. Third-quarter 2026 book-to-bill reached 4.0, reflecting substantial new orders. The seven-year PAC-3 agreement contributed to a multiyear contract valued at up to $58.6 billion, alongside the earlier seven-year THAAD agreement worth $35 billion.
Geopolitical tensions are driving allies to strengthen air defense, missile defense, advanced combat aircraft and maritime capabilities. This creates opportunities for established programs such as the F-35, PAC-3, THAAD and HIMARS. In the third quarter of 2026, Lockheed secured a $439 million ATACMS production contract supporting Taiwan's HIMARS launchers and an $800 million award for Australia's AIR6500 battle management program.
On Nov. 5, 2026, Lockheed Martin announced that it is accelerating the development and production of its Orion spacecraft for NASA’s Artemis III, IV and V missions. This initiative is expected to benefit Lockheed Martin by improving production efficiency, reducing manufacturing costs and delivery timelines, and strengthening its ability to execute future Orion contracts. As the prime contractor for Orion, Lockheed Martin is well positioned to capitalize on NASA's longer-term plans for sustained lunar exploration and eventual human missions to Mars, supporting growth opportunities in its Space business.
On Oct. 26, 2026, Lockheed Martin announced the completion of its $3.45 billion acquisition of Ultra Maritime, a global defense company specializing in undersea warfare and anti-submarine warfare technologies for allied naval forces. The acquisition will strengthen Lockheed Martin's Rotary and Mission Systems (“RMS”) business by expanding its existing sonar portfolio and adding advanced capabilities to detect, track and counter underwater threats. Ultra Maritime's international presence and established relationships with allied navies will also expand Lockheed Martin's reach in global defense markets.
Challenges for LMT Stock
Lockheed Martin remains exposed to cost-estimate and schedule risk on complex programs, especially under fixed-price arrangements. Although the absence of $1.6 billion in prior-year reach-forward losses supported earnings growth during the first nine months of 2026, unfavorable program adjustments continued. In the third quarter of 2026, Aeronautics recognized $40 million of higher unfavorable adjustments on each of its F-16 and C-130 programs.
Estimates for LMT Stock
The Zacks Consensus Estimate for 2026 earnings per share (EPS) indicates year-over-year growth of 32.61%. LMT’s long-term (three to five years) earnings growth rate is 15.37%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for RTX’s 2026 EPS indicates year-over-year growth of 22.1%. RTX’s long-term earnings growth rate is 11.69%. The Zacks Consensus Estimate for General Dynamics’ 2026 EPS indicates year-over-year growth of 91.5%. GD’s long-term earnings growth rate is 10.27%.
LMT’s Earnings Surprise History
The company beat on earnings in three of the trailing four quarters and missed in one, delivering an average surprise of 8%.
Image Source: Zacks Investment Research
LMT Stock’s Liquidity
The company’s current ratio is 1.26 compared with the industry’s average of 1.10. The ratio of more than one suggests a healthy liquidity position where the business can meet its immediate financial obligations without selling long-term assets.
Image Source: Zacks Investment Research
LMT Stock Trades at a Discount
In terms of valuation, LMT’s forward 12-month price-to-sales (P/S) is 1.56X, a discount to the industry’s average of 2.16X. This suggests that the stock is trading at a lower valuation relative to its projected sales growth than its peer group.
Image Source: Zacks Investment Research
What Should an Investor Do Now?
Lockheed Martin benefits from strong global defense demand, securing long-term contracts that strengthen backlog, improve revenue visibility and support production expansion across its key defense programs. Additionally, Orion production acceleration and the Ultra Maritime acquisition strengthen its Space and RMS businesses, creating opportunities in lunar exploration, undersea warfare and international defense markets.
Given its current price performance, earnings growth and strong liquidity, investors should consider adding LMT stock to their portfolios right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.