LMT Outperforms Industry in 3 Months: What's Next for Investors?

Lockheed Martin’s LMT shares have risen 19.3% in the past three months, outperforming the Zacks Aerospace-Defense industry’s decline of 4%. Its broad product offerings allow it to secure major defense contracts, boosting its backlog count. Apart from enjoying a strong forte on the domestic front, Lockheed Martin’s products are also well acclaimed in the international market.

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Other defense stocks like The Boeing Company BA remains one of the largest U.S. commercial aircraft manufacturers. Steadily growing commercial air travel should boost Boeing’s services business unit. BA’s shares have lost 9.4% in the past three months. Northrop Grumman NOC boasts a solid presence in Defense and Cyber Security programs, with its product line being well positioned in high-priority categories. Northrop Grumman’s shares have gained 15% during the same period.

Considering Lockheed Martin’s outperformance compared with its industry, investors might be left wondering if this is a good time to add the 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 clinched several notable deals in the fourth quarter of 2025, including a contract for 18 space vehicles for its Tranche 3 Tracking Layer (TRKT3) constellation, with a potential value of more than $1 billion. It also secured a $233 million contract to deliver IRST21 Block II systems and initial spares to the U.S. Navy and Air National Guard (“ANG”). These order flows have resulted in a solid backlog, which totaled $193.6 billion as of Dec. 31, 2025.

On April 1, 2026, Lockheed Martin’s Orion spacecraft launched aboard NASA’s Space Launch System rocket from Kennedy Space Center, Florida, initiating the historic Artemis II mission and marking humanity’s first crewed return toward the Moon in more than five decades. This milestone strengthens LMT’s financial outlook and strategic position in space. As the prime contractor for Orion, each successful mission reinforces NASA’s reliance on the program, increasing the likelihood of continued production orders and long-term support contracts that generate steady revenues.

In March 2026, Lockheed Martin opened its Rapid Fielding Center, a facility that streamlines the end-to-end development, testing and prototype production of next-generation systems and solutions for U.S. government customers. Overall, this strengthens LMT’s ability to secure future defense programs and scale production faster.

Challenges Faced by LMT Stock

Lockheed Martin experienced performance issues on a classified fixed-price incentive fee contract in its Aeronautics business segment and periodically recognized reach-forward losses. During 2025, the company recorded losses of $950 million on this program. It also reported losses of $570 million in the Canadian Maritime Helicopter Program, $95 million in the Turkish Utility Helicopter Program at its RMS business segment and $140 million of unfavorable profit adjustments on C-130 programs at its Aeronautics business segment. The company may incur additional losses in the future if it experiences further performance issues, scope increases, or cost growth, which could materially affect its financial results.

Estimates for LMT Stock

The Zacks Consensus Estimate for 2026 earnings per share (EPS) has risen 0.47% over the past 60 days. LMT’s long-term (three to five years) earnings growth rate is 18.57%.

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The Zacks Consensus Estimate for Boeing’s 2026 EPS has decreased 33.8% over the past 60 days. The Zacks Consensus Estimate for Northrop Grumman’s 2026 EPS has declined 0.39% over the past 60 days. NOC’s long-term earnings growth rate is 4.8%.

LMT’s Earnings Surprise History

The company beat on earnings in each of the trailing four quarters, delivering an average surprise of 14.01%.

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LMT’s Debt Position

Currently, the company’s total debt to capital is 76.35%, higher than the industry’s average of 48.79%.

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LMT’s time-to-interest earned ratio at the end of the fourth quarter of 2025 was 6.3. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

LMT Stock Trades at a Discount

In terms of valuation, LMT’s forward 12-month price-to-sales (P/S) is 1.8X, a discount to the industry’s average of 2.45X. This suggests that investors will be paying a lower price than the company's expected sales growth compared with its peer group.

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What Should an Investor Do Now?

Lockheed Martin secured multiple major defense and space contracts in late 2025, strengthening its backlog and reinforcing steady future demand for its systems. Recent milestones, including the Orion Artemis II mission and the opening of its Rapid Fielding Center, enhance its long-term growth by boosting space leadership, accelerating innovation, and improving its ability to win and scale future programs.

Considering its financial pressures and higher debt levels, new investors should wait and look for a better entry point. Investors who already hold this Zacks Rank #3 (Hold) stock may consider retaining it, given the company’s strong earnings growth outlook.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The Boeing Company (BA): Free Stock Analysis Report

Lockheed Martin Corporation (LMT): Free Stock Analysis Report

Northrop Grumman Corporation (NOC): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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