Lockheed Martin Stock Rises 13.7% in a Month: Here's How to Play

Core Insights - Lockheed Martin's shares have increased by 13.7% over the past month, outperforming the Zacks Aerospace-Defense industry's growth of 3.6% [1][7] - The company is one of the largest U.S. defense contractors, benefiting from a steady order flow from the Pentagon and U.S. allies [1][3] Performance of Other Defense Stocks - Boeing and Northrop Grumman have also shown strong performance, with shares rising by 16.6% and 9.2% respectively during the same period [2] Factors Supporting Lockheed Martin - Lockheed Martin's platform-centric focus ensures a steady inflow of follow-on orders across major U.S. military branches and IT programs [3][18] - The U.S. defense budget is expected to rise significantly, with military spending proposed to reach approximately $1.5 trillion by 2027, up from $901 billion in 2026 [3] - A historic deal in January 2026 for PAC-3 MSE production will enhance revenues through increased missile output to meet rising demand [4][18] - Record deliveries of 191 F-35 fighter jets in 2025 reflect sustained global demand and strengthen long-term production and maintenance contracts [5][18] - Lockheed Martin secured a contract for 18 space vehicles from the Space Development Agency, valued at over $1 billion, enhancing its role in space-based defense capabilities [8] Challenges Faced by Lockheed Martin - The company has encountered performance issues on a classified contract, resulting in significant losses, including $950 million in the first nine months of 2025 [9] - Additional losses were reported on various programs, including $570 million on the Canadian Maritime Helicopter Program and $95 million on the Turkish Utility Helicopter Program [9] Earnings Estimates - The Zacks Consensus Estimate for 2026 earnings per share indicates a slight decrease of 0.17% over the past 60 days, with a long-term earnings growth rate projected at 11.85% [10] - Lockheed Martin has consistently beaten earnings estimates in the past four quarters, with an average surprise of 13.29% [12] Valuation Metrics - Lockheed Martin's forward 12-month price-to-sales ratio is 1.64X, which is a discount compared to the industry's average of 2.72X, indicating a favorable valuation relative to expected sales growth [15]