Overview
Lockheed Martin
LMT · NYSEQ3 2026Defense · Aerospace
Since the Report + 6.7%
Revenue grew 11.3% year over year, EPS beat the estimate by 7.3%; the stock rose 7.0% in its first reaction.
- RevenueQ3
- $20.71B
- ▲ 11.3% YoY · Beat Estimate by 1.0%
- EPSGAAP
- $7.97
- Estimate $7.43 · Beat by 7.3%
Verdict
HOLDLockheed Martin beat third-quarter EPS estimates by 7.3%, while revenue landed just 1.0% above expectations. Backlog hit a record $292 billion and the company raised its annual outlook for the second time; the stock closed up 7.0%. The next things to watch are F-35 Lot 20 funding and free cash flow.
Close on Report DayOct 22
$589.91▲ 7.0%Report-Day Move
- Market Cap(Today)
- ≈ $145 B
- 1Y Return(At Report)
- + 19%
- P/E(At Today's Price · $28.15 · Trailing 12M)
- 22.4
- Net Margin(Trailing 12M)
- 8.2%
Earnings Summary
In 30 Seconds- Sales of $20.71 billion beat the estimate by 1.0%, and EPS of $7.97 beat by 7.3%.
- Backlog set a record at $292.0 billion, and annual free cash flow guidance was raised 11.3%.
- The stock closed up 7.0% on the record backlog and higher outlook, but F-35 Lot 20 funding is an open question.
The Numbers
Backlog
$292.0B
Record · ▲ 27% QoQ
Segment Operating Margin
10.8%
▼ 0.1 Points YoY
Free Cash Flow
$3.00B
▼ 10.4% YoY
Stock Reaction
▲ 7.0%
Close-to-Close · Intraday High $608
Quarterly Revenue ($ Billion)
18.61
Q3 25 · $18.6 B
20.32
Q4 25 · $20.3 B · QoQ + 9.2%
18.02
Q1 26 · $18.0 B · QoQ − 11.3%
20.06
Q2 26 · $20.1 B · QoQ + 11.3%
20.71
Q3 26 · $20.7 B · QoQ + 3.2% · YoY + 11.3%
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26
Q4 2026 Company Guidance
- Annual Sales80 – 82 billion80 billion82 billion
Midpoint 81.0 · Prior 79.75–81.75Raised 0.3% ▲
- Annual EPS30.35 – 30.75 $30.35 $30.75 $
Midpoint 30.55 · Market Expectation 30.41 · Prior 29.95–30.65In Line ✓
- Free Cash Flow7.8 – 8.0 billion7.8 billion8.0 billion
Midpoint 7.9 · Prior 7.0–7.2Raised 11.3% ▲
- Segment Operating Profit8.575 – 8.675 billion8.575 billion8.675 billion
Prior 8.50–8.70 · Range NarrowedRaised 0.3% ▲
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±1.5% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Aeronautics$8.21 BShare 39.7%▲ 13.2% YoY
- Rotary and Mission Systems$4.51 BShare 21.8%▲ 3.2% YoY
- Missiles and Fire Control$4.50 BShare 21.7%▲ 24.2% YoY
- Space$3.49 BShare 16.8%▲ 3.8% YoY
Key Metrics
Segment Operating Profit
$2.23 B
▲ 9.9% YoYPress Release
Net Earnings
$1.85 B
▲ 14.0% YoYPress Release
Operating Cash Flow
$3.44 B
▼ 7.8% YoYPress Release
Capital Expenditures
$439 M
Press Release
Missiles and Fire Control Operating Profit
$631 M
▲ 23.7% YoYPress Release
Shares are computed over the segment total: $20.7 B. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“Our strong third quarter performance underscores Lockheed Martin's continuing leadership in the development and delivery of advanced and reliable defense technology solutions. In the third quarter each of our four segments posted growth year-over-year, sales topped $20.7 billion and net earnings exceeded $1.8 billion, increases of 11% and 14% respectively. We delivered $3 billion of free cash flow in the quarter, and increased our backlog to a record $292 billion, allowing us to raise our dividend for the 24th year in a row. The sustained financial momentum across our portfolio gives us confidence to increase our outlook for sales, earnings per share and free cash flow, the second consecutive quarter we have raised our financial guidance.”
- Record Backlog
- Missile Production Capacity Ramp
- Ten-year F-35 Framework
Summary and Review
Summary
Lockheed Martin's third-quarter sales were $20.71 billion. That is up 11.3% year over year, but only 1.0% above the market expectation. So the revenue gate counts as in line. EPS of $7.97 beat the estimate by 7.3%, so the profit gate is open. The midpoint of annual EPS guidance is $30.55. That is 0.5% above the market expectation, so the guidance gate is in line. This sets the score at 62 and the view at hold.
The stock closed at $589.91, up 7.0% on the day. At the open the gain neared 9%, with an intraday high of $608. Part of the gain was given back during the session. The market did not read this report as a profit story but as an orders story. Backlog rose 27% from the second quarter to $292.0 billion. The same day, a ten-year F-35 framework for at least 850 jets was finalized with the Pentagon.
The score is 62 and the view is hold. Orders are strong, but the numbers did not beat estimates by a wide margin. Quarterly free cash flow fell 10.4% year over year to $3.00 billion. The company disclosed that F-35 Lot 20 costs have started to exceed current funding. No shares have been bought back in 2026 so far. The stock is 5.9% below the average analyst target of $627.10. The strong order book has not yet turned into cash and shareholder returns.
Full Review
All four segments grew.
The fastest-growing segment was Missiles and Fire Control. Sales rose 24.2% year over year to $4.50 billion. Segment operating profit rose 23.7% to $631 million. Behind this growth is the production ramp in missile programs such as PAC-3. Aeronautics grew 13.2% to $8.21 billion. This segment carries 40% of total sales. Rotary and Mission Systems grew 3.2%, and Space grew 3.8%. Space operating profit was flat at $331 million. Growth is concentrated in missiles and aircraft. The other two segments are moving more slowly. Missiles and Fire Control now makes up 21.7% of total sales, up from 19.5% a year ago. Its 14.0% operating margin is the highest in the company.
Margin flat, profit growth comes from sales.
Segment operating profit rose 9.9% to $2.23 billion. Segment operating margin was 10.8%, 0.1 points below 10.9% a year earlier. So profit growth came from sales volume, not margin expansion. Net earnings rose 14% to $1.85 billion. EPS rose 14.7%, from $6.95 to $7.97. There was no large loss charge this quarter. In the first nine months of last year, loss charges exceeded $1.6 billion. Small unfavorable adjustments continue on the F-16, C-130 and helicopter programs. None is large enough to change the picture on its own. Aeronautics operating margin was 9.0%, 0.4 points below 9.4% a year earlier. Space margin fell from 9.9% to 9.5%.
Guidance raised for the second time.
Annual sales guidance rose to $80.0-82.0 billion. The midpoint moved up 0.3%. EPS guidance rose from $29.95-30.65 to $30.35-30.75. The $30.55 midpoint is 0.8% above the prior midpoint. The biggest revision is on cash. Free cash flow guidance rose from $7.0-7.2 billion to $7.8-8.0 billion. The midpoint increase is 11.3%. The company will give formal 2027 guidance in January. On the earnings call, the CFO said he expects all four segments to grow next year. The dividend was raised for the 24th straight year, to $3.60 per quarter. The raised EPS midpoint is only 0.5% above the market expectation. That is why the guidance gate counts as in line rather than open. The cash revision is far more pronounced.
Record backlog, but cash and F-35 questions.
Backlog set a record at $292.0 billion. That equals about three and a half years of sales. But quarterly free cash flow fell from $3.35 billion to $3.00 billion. Operating cash flow also fell 7.8% to $3.44 billion. Capital spending was $439 million in the quarter. The company bought back no shares in the first nine months of 2026. In the same period last year, buybacks totaled $2.25 billion. The second question is F-35 Lot 20. According to the release, costs have begun to exceed current contract authorization and funding. Without more funding, results will be hurt in future periods. The ten-year F-35 framework announced the same day ties demand to the long term. But Congress still has to approve the multiyear purchase.
Watch one line next quarter.
Next quarter, look at one line: free cash flow. Annual guidance is $7.8-8.0 billion, and nine-month results leave a large share for the fourth quarter. If fourth-quarter cash comes in strong and buybacks resume, the record backlog is turning into profit and cash. If cash falls short of the target, the backlog's value is getting stuck in capital spending and working capital. The second measure is F-35 Lot 20 funding. If a new loss charge arrives before funding is secured, this quarter's clean profit picture breaks. January's 2027 guidance should largely answer both questions. For the general method of reading an earnings day, see the guide, and for cash items the cash flow guide.
Looking Ahead
Strengths and Risks
4 Strengths · 4 RisksStrengths
4- Backlog rose 27% from the second quarter to a record $292.0 billion.
- Missiles and Fire Control sales grew 24.2% year over year.
- Annual free cash flow guidance was raised 11.3% at the midpoint.
- A ten-year F-35 framework for at least 850 jets was finalized with the Pentagon.
Risks
4- F-35 Lot 20 costs have begun to exceed current contract funding.
- Quarterly free cash flow fell 10.4% year over year to $3.00 billion.
- No shares were repurchased in the first nine months of 2026.
- Segment operating margin of 10.8% was 0.1 points below last year.
What to Watch
3- The company is expected to give 2027 guidance with fourth-quarter results in January 2027.
- Congressional approval is pending for the ten-year F-35 multiyear purchase.
- The $3.60 quarterly dividend will be paid in December.
Upcoming Earnings
To Understand This