Defense stocks soaring—should you buy RTX or Lockheed Martin before the next military contract surge?

**Both Raytheon Technologies (RTX) and Lockheed Martin (LMT) present attractive opportunities**, but your decision should align with your risk tolerance, investment horizon, and confidence in the defense sector's future growth. 1. **Recent Performance and Growth Prospects**: - **Raytheon Technologies (RTX)**: RTX has demonstrated strong financials with a net income of $1.73 billion and a diluted EPS of $1.22 for the latest quarter. The company's revenue growth rate is 0.09%, with a solid backlog of $236 billion and a history of securing significant defense contracts. RTX's diversified business model, combining commercial aerospace and defense, provides a buffer against market volatility. The company's dividend yield is 3.32%, and it has a P/E ratio of 33.73, indicating that the stock may be slightly overvalued compared to its peers. - **Lockheed Martin (LMT)**: LMT's financials show a net income of $342 million and a diluted EPS of $1.46 for the latest quarter. The company's revenue growth rate is flat, and it faces challenges with internal controls as highlighted in the class action lawsuits. Despite these, LMT has a strong position in the defense sector and has recently secured significant contracts. The company's dividend yield is 3.63%, and it has a P/E ratio of 23.64, suggesting it may be more reasonably valued compared to RTX. |code|Ticker|Name|Date|Total Revenue|market_code| |---|---|---|---|---|---| |LMT|LMT.N|Lockheed Martin|2024 Q3|1.7104E10|169| |RTX|RTX.N|RTX|2024 Q3|2.0089E10|169| |LMT|LMT.N|Lockheed Martin|2024 Q4|1.8622E10|169| |RTX|RTX.N|RTX|2024 Q4|2.1623E10|169| |LMT|LMT.N|Lockheed Martin|2025 Q1|1.7963E10|169| |RTX|RTX.N|RTX|2025 Q1|2.0306E10|169| |LMT|LMT.N|Lockheed Martin|2025 Q2|1.8155E10|169| |RTX|RTX.N|RTX|2025 Q2|2.1581E10|169| |code|Ticker|Name|Date|Net Income|market_code| |---|---|---|---|---|---| |LMT|LMT.N|Lockheed Martin|2024 Q3|1.623E9|169| |RTX|RTX.N|RTX|2024 Q3|1.535E9|169| |LMT|LMT.N|Lockheed Martin|2024 Q4|5.27E8|169| |RTX|RTX.N|RTX|2024 Q4|1.56E9|169| |LMT|LMT.N|Lockheed Martin|2025 Q1|1.712E9|169| |RTX|RTX.N|RTX|2025 Q1|1.625E9|169| |LMT|LMT.N|Lockheed Martin|2025 Q2|3.42E8|169| |RTX|RTX.N|RTX|2025 Q2|1.725E9|169| |code|Ticker|Name|Date|Diluted EPS|market_code| |---|---|---|---|---|---| |LMT|LMT.N|Lockheed Martin|2024 Q3|6.8|169| |RTX|RTX.N|RTX|2024 Q3|1.09|169| |RTX|RTX.N|RTX|2024 Q4|1.1|169| |LMT|LMT.N|Lockheed Martin|2025 Q1|7.28|169| |RTX|RTX.N|RTX|2025 Q1|1.14|169| |LMT|LMT.N|Lockheed Martin|2025 Q2|1.46|169| |RTX|RTX.N|RTX|2025 Q2|1.22|169| |code|Ticker|Name|Date|P/E(TTM)|P/S|Price to Book Ratio|market_code| |---|---|---|---|---|---|---|---| |LMT|LMT.N|Lockheed Martin|20240812|19.706644|1.879320942474304|21.496996834126314|169| |RTX|RTX.N|RTX|20240812|68.570252|1.9872125003279866|2.629582267959651|169| |LMT|LMT.N|Lockheed Martin|20240813|19.795462|1.887791064335306|21.593884054778947|169| |RTX|RTX.N|RTX|20240813|68.723153|1.9916436774299187|2.6354458304782575|169| |LMT|LMT.N|Lockheed Martin|20240814|19.929927|1.9006143563957867|21.740565902778947|169| |RTX|RTX.N|RTX|20240814|69.187737|2.0051076386242506|2.6532620396694075|169| |LMT|LMT.N|Lockheed Martin|20240815|19.826247|1.8907269233070476|21.627466477873682|169| |RTX|RTX.N|RTX|20240815|69.605274|2.017208160710296|2.66927407577791|169| |LMT|LMT.N|Lockheed Martin|20240816|19.820586|1.8901869952202905|21.621290400063156|169| |RTX|RTX.N|RTX|20240816|69.364161|2.010220535280326|2.6600276887293384|169| |code|Ticker|Name|Date|Total Revenue|Net Income|Diluted EPS|market_code| |---|---|---|---|---|---|---|---| |LMT|LMT.N|Lockheed Martin|2024 Q3|1.7104E10|1.623E9|6.8|169| |RTX|RTX.N|RTX|2024 Q3|2.0089E10|1.535E9|1.09|169| |LMT|LMT.N|Lockheed Martin|2024 Q4|1.8622E10|5.27E8||169| |RTX|RTX.N|RTX|2024 Q4|2.1623E10|1.56E9|1.1|169| |LMT|LMT.N|Lockheed Martin|2025 Q1|1.7963E10|1.712E9|7.28|169| |RTX|RTX.N|RTX|2025 Q1|2.0306E10|1.625E9|1.14|169| |LMT|LMT.N|Lockheed Martin|2025 Q2|1.8155E10|3.42E8|1.46|169| |RTX|RTX.N|RTX|2025 Q2|2.1581E10|1.725E9|1.22|169| 2. **Valuation and Dividend**: - Both companies offer dividends, with RTX's yield slightly higher than LMT's. However, RTX's P/E ratio suggests that investors are willing to pay a premium for its growth prospects. - LMT's lower P/E ratio and higher dividend yield might make it an attractive option for income-focused investors, but its valuation concerns and recent legal issues should be considered. 3. **Market Sentiment and Future Outlook**: - Both RTX and LMT are likely to benefit from the increased global defense spending and the anticipated surge in military contract awards. - RTX's diversified business model and recent contract wins, along with its strong financials, make it a robust candidate for investors looking for both growth and income. - LMT's focus on defense and recent contract modifications indicate a strong commitment to national security, but its internal control issues and legal challenges pose risks. 4. **Strategic Positioning and Innovation**: - RTX's innovation in areas like artificial intelligence, advanced propulsion, and transformative technologies positions it well for future growth. - LMT's historical role in defense and recent innovations in autonomous launchers suggest a strategic importance in national defense. **Conclusion**: If you are looking for a more stable income with a lower valuation, Lockheed Martin might be the better choice. However, if you are willing to pay a premium for growth potential and are confident in the long-term outlook of the defense sector, Raytheon Technologies could be the more attractive option. Consider your investment goals, risk tolerance, and the current geopolitical landscape when making your decision.