Lockheed Martin vs. Northrop Grumman: Who's Currently the Better Play?

Geopolitical instability across the globe has been a major catalyst for the growth of defense giants, such as Lockheed Martin LMT and Northrop Grumman NOC. Both are leading U.S. aerospace & defense contractors that compete directly for major government and military contracts, particularly in advanced weapons systems, aircraft and defense technology.

When agencies like the U.S. Department of Defense or allied governments launch significant, strategic programs to upgrade military capabilities, both companies are typically qualified to compete. These programs often involve multi-billion-dollar, long-term contracts to develop cutting-edge systems that enhance surveillance, deterrence and combat effectiveness. The two companies frequently submit competing bids, each leveraging its technological expertise, past performance and cost efficiency to win projects that are critical for national security and defense modernization.

Let's compare the two stocks' fundamentals to determine which one is better positioned at present.

The Standpoint of LMT

Lockheed Martin benefits from its dominant position as one of the largest U.S. defense contractors, with a platform-based strategy that drives recurring orders across multiple military branches. LMT was successful in clinching several notable deals in the fourth quarter of 2025. These include a contract for 18 space vehicles for its Tranche 3 Tracking Layer (TRKT3) constellation, with a potential value of more than $1 billion. The company also clinched a $233 million contract to deliver IRST21 Block II systems and initial spares to the U.S. Navy and Air National Guard. Order flows from the Navy and Air National Guard built a robust backlog of $193.6 billion as of Dec. 31, 2025.

The F-35 program continues to be a key growth program for the company’s Aeronautics business segment. This program generated approximately 27% of Lockheed Martin’s consolidated net sales in 2025. The company has delivered 1,293 F-35 airplanes since the program's inception, with 368 jets in the backlog as of Dec. 31, 2025. This surely boosts expectations for the Aeronautics business segment’s sales, which improved 6.4% year over year in the fourth quarter of 2025.

The Standpoint of NOC

Northrop Grumman is expected to maintain steady organic growth in 2026 and beyond as it wins new awards and converts its robust backlog of $95.68 billion as of Dec. 31, 2025, into solid sales. The company anticipates recognizing roughly 35% of the backlog over the next 12 months and 60% over 24 months, with the remainder to be realized thereafter.

NOC’s management sees numerous multibillion-dollar opportunities globally, as allied nations increase investments in air and missile defense, ground-based radars, airborne Intelligence, Surveillance, and Reconnaissance and other advanced weapon systems to strengthen deterrence. This rising demand positions Northrop Grumman to deliver solutions aligned with evolving customer needs.

How Do Zacks Estimates Compare for LMT & NOC?

The Zacks Consensus Estimate for Lockheed Martin’s 2026 earnings per share (EPS) indicates an increase of 1.29% 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 Northrop Grumman’s 2026 EPS indicates a decrease of 2.08% over the past 60 days. NOC’s long-term earnings growth rate is 4.8%.

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Valuation for LMT & NOC

LMT shares trade at a forward 12-month Price/Sales (P/S F12M) of 1.85X compared with NOC’s P/S F12M of 2.28X.

Liquidity of LMT & NOC

Lockheed Martin and Northrop Grumman’s current ratio is 1.09 and 1.1, respectively. A current ratio greater than one indicates that the company has enough short-term assets to liquidate to cover all short-term liabilities, if necessary.

LMT & NOC’s Price Performance

In the past six months, shares of Lockheed Martin and Northrop Grumman have increased 33.2% and 24%, respectively.

LMT or NOC: Which Is a Better Choice Now?

Lockheed Martin is one the largest U.S. defense contractors with a platform-centric focus. Strong contract wins, a healthy backlog, and continued growth from the F-35 Lightning II program support LMT, driving a substantial share of its sales. Northrop Grumman is poised for steady growth backed by its solid backlog conversion and rising global demand for advanced defense systems, creating strong multibillion-dollar opportunities ahead.

Our choice at the moment is Lockheed Martin, given its better price performance, strong earnings growth and better valuation than NOC. Both LMT and NOC carry a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Lockheed Martin Corporation (LMT): Free Stock Analysis Report

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

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