Lockheed Martin Stock Loses 9% YTD: Should You Buy the Stock Now?

Core Viewpoint - Lockheed Martin Corp. (LMT) has experienced a 9% decline in share price year-to-date, underperforming both the Zacks Aerospace-Defense industry and the broader Zacks Aerospace sector, which saw increases of 4.1% and 4.5% respectively [1][2]. Company Performance - LMT's fourth-quarter 2024 results revealed revenues of $18.62 billion, which fell short of analysts' expectations and represented a 1.3% year-over-year decline, negatively impacting investor confidence [4]. - Recent negative news, including potential tariff impositions by U.S. President Trump, has raised concerns about LMT's competitiveness, particularly regarding its F-35 aircraft, which may face competition from local manufacturers in Europe [5]. - Analysts from Melius Research and BofA have downgraded LMT's stock rating following the announcement that Boeing was selected over Lockheed for the USAF's Next Generation Air Dominance program [6]. Market Outlook - The global defense industry is projected to grow due to increased defense spending driven by geopolitical tensions, with a CAGR of 3.7% expected for the global fighter aircraft market from 2025 to 2030 [7]. - Lockheed's F-35 is recognized as a leading fighter jet, with plans to deliver 156 units annually starting in 2025, which could enhance long-term sales prospects [8]. Sales and Earnings Estimates - The Zacks Consensus Estimate indicates a sales increase of 17.48% for 2025 and 4.6% for 2026 [9]. - Earnings estimates show a mixed outlook, with a projected decline of 4.6% for 2025 but a rise of 9.1% for 2026. Recent downward revisions in earnings estimates for the first quarter and full year of 2025 suggest declining analyst confidence [11]. Challenges Facing the Company - Lockheed faces challenges from U.S. sanctions affecting contracts with the Turkish industry, which may lead to significant losses if contracts are restructured or terminated [15]. - The aerospace industry is experiencing a labor shortage, particularly among skilled workers, with an estimated gap of 3.5 million workers projected by 2026 due to an aging workforce [16]. - LMT's debt-to-capital ratio stands at 76.19, significantly higher than the industry average of 53.11, indicating greater financial risk and cash flow burden [18].