Lockheed Martin 2025 Q2 Earnings Misses Targets as Net Income Drops 79%

Lockheed Martin Corporation (NYSE: LMT) reported second quarter 2025 financial results on July 22, 2025, with sales of $18.2 billion, slightly below the Street estimate of $18.63 billion. The company faced substantial pre-tax losses of $1.6 billion due to performance issues in legacy programs, causing GAAP earnings per share to plunge to $1.46 from $6.63 a year ago. Lockheed Martin reaffirmed its sales outlook of $73.75 billion—$74.75 billion for 2025 but revised its GAAP EPS guidance down to $21.70–$22.00 from $27.00–$27.30.

Revenue

Lockheed Martin reported a modest 0.2% increase in total revenue for 2025 Q2, reaching $18.16 billion compared to $18.12 billion in 2024 Q2. The Aeronautics segment led the revenue with $7.42 billion, followed by Missiles and Fire Control at $3.43 billion. Rotary and Mission Systems contributed $4 billion, while the Space segment added $3.31 billion, collectively comprising the total revenue figure.

Earnings/Net Income

The company’s earnings per share (EPS) dropped sharply by 78.7% to $1.46 in 2025 Q2, compared to $6.87 in 2024 Q2. Net income fell to $342 million, down 79.2% from $1.64 billion in the previous year. These figures reflect a challenging quarter for Lockheed Martin, with EPS showing significant weakness.

Price Action

Lockheed Martin's stock experienced a downturn, declining by 2.84% during the latest trading day and dropping by 12.63% over the most recent trading week. The month-to-date performance saw a 12.35% decrease, reflecting investor reactions to the disappointing earnings results and ongoing program challenges.

Post-Earnings Price Action Review

The strategy of purchasing Lockheed Martin shares following an earnings beat and holding for 30 days yielded moderate returns but fell short compared to broader market performance. This approach generated a 39.55% return, notably lower than the benchmark return of 86.76%. Despite a Sharpe ratio of 0.32, indicating reasonable risk-adjusted returns, the strategy's maximum drawdown was 0%, suggesting an avoidance of losses but also a missed opportunity to capitalize on larger market gains. Overall, the strategy highlighted the challenges of generating substantial returns in the defense sector when faced with program losses and market volatility.

CEO Commentary

James D. Taiclet, Chairman, President & CEO, underscored the effective performance of Lockheed Martin's systems, driving customer demand for accelerated production and advanced technology development. He acknowledged challenges in legacy programs, leading to a reevaluation of financial positions and recognition of $1.8 billion in charges. Taiclet emphasized the importance of program management and committed to enhancing oversight and risk management. He expressed optimism for future growth, citing strong demand for platforms like the F-35 and increased munition spending, reinforcing Lockheed Martin's role in national security.

Guidance

Lockheed Martin reaffirmed its 2025 sales guidance of $73.75 billion to $74.75 billion, with segment operating profit expected between $6.6 billion and $6.7 billion. The company adjusted its EPS estimate to $21.70 to $22, accounting for recent charges. Free cash flow guidance remains at $6.6 billion to $6.8 billion for 2025. For 2026, free cash flow is anticipated to be closer to $6 billion, reflecting ongoing investments and operational improvements.

Additional News

Lockheed Martin (NYSE: LMT) recently completed the acquisition of Amentum's Rapid Solutions product business for $360 million, aligning with its strategic focus on technology-enabled solutions. Furthermore, Lockheed Martin declared a third-quarter dividend of $3.30 per share, scheduled for distribution on September 26, 2025. The collaboration between Lockheed Martin Skunk Works and Electra.aero has expanded, aiming to accelerate the commercialization of the EL9 Ultra-STOL aircraft, with applications in military operations like last-mile logistics and emergency response. These developments reflect Lockheed Martin's ongoing efforts to enhance its technological capabilities and shareholder value.