Lockheed Martin Pops as Traders Price a Bigger Defense Spend Cycle

Core Viewpoint - Lockheed Martin's stock surged by 7.77% to $535.22 in premarket trading following President Trump's announcement of a $1.5 trillion defense budget for 2027, marking a 50% increase from the previous plan of $1 trillion [1][3]. Group 1: Defense Budget Announcement - President Trump described the increased defense budget as necessary to build a "Dream Military" to ensure America's safety and security [2][3]. - The proposed defense budget for 2027 has been increased by $500 billion over previous plans, reflecting the current global conditions [3]. - The announcement follows recent military actions, including the capture of Venezuelan President Nicolas Maduro, and Trump's rhetoric regarding Greenland and Venezuelan oil reserves [4]. Group 2: Market Reaction - The defense industry reacted positively, with Lockheed Martin leading a sector-wide rally; other major contractors also saw significant gains, including Northrop Grumman (up 8.3%), RTX (up 4.8%), and Kratos Defense (up 12%) [5]. - European defense stocks also experienced gains, with the Stoxx Europe Aerospace and Defense index rising by 1.1% [6]. Group 3: Lockheed Martin Stock Performance - Lockheed Martin shares traded at $535.22, up $38.58 or 7.77% from the previous close of $496.87, nearing its 52-week high of $538.73 [7][8]. - The company has a market capitalization of approximately $116 billion, maintaining its position as one of the largest aerospace and defense contractors globally [8]. - Lockheed Martin's financial metrics include a trailing P/E ratio of 27.70, a forward P/E of 16.81, and earnings per share of $17.94, with strong third-quarter results showing revenue of $18.61 billion and earnings of $1.62 billion [9].