Key Takeaways
- Lockheed Martin’s Q2 earnings per share reached $7.94, crushing the Street’s $7.09 expectation
- Quarterly revenue climbed 11% from the prior year to $20.06 billion, exceeding forecasts of $19.34 billion
- New contract awards totaling $65 billion drove the order backlog to an unprecedented $230 billion
- Management upgraded full-year EPS projections to $29.95–$30.65 and revenue guidance to $79.75–$81.75 billion
- Shares traded flat at $568.60 in Friday’s premarket session following Thursday’s rally
Defense contractor Lockheed Martin (LMT) reported impressive second-quarter results Thursday, presenting investors with compelling data points to consider.
Lockheed Martin Corporation, LMT
The aerospace and defense manufacturer reported GAAP earnings of $7.94 per diluted share, significantly surpassing analyst expectations of $7.09. Quarterly sales reached $20.06 billion, marking an 11% increase from the same period last year and exceeding Wall Street’s $19.34 billion projection.
Shares rallied Thursday following the earnings announcement, although LMT remains approximately 17% off its 2024 peak entering Friday’s trading session. The stock showed minimal movement at $568.60 in early premarket activity.
The quarter’s most impressive metric proved to be the company’s order book. Lockheed closed Q2 with an unprecedented $230.4 billion in total backlog — representing approximately $64 billion in growth compared to the prior-year period. The firm achieved a book-to-bill ratio of 3.2-to-1, indicating it secured $3.20 in new contracts for each dollar of recognized revenue.
This substantial backlog growth stemmed from major contract wins throughout the quarter. Lockheed secured a massive $35 billion THAAD interceptor program and a $3 billion GMLRS agreement, contributing to the quarter’s $65 billion in total new awards.
Cash generation showed strong improvement, with free cash flow reaching $2.9 billion in Q2, bouncing back from previous program setbacks and supply chain disruptions that had pressured performance.
Management Raises Full-Year Outlook
The company increased its full-year earnings forecast to $29.95–$30.65 per share, up from the previous target of $29.35–$30.25. This updated range exceeds the Wall Street consensus estimate of $29.86.
Lockheed also boosted its 2026 sales projection to $79.75–$81.75 billion, compared with the earlier forecast of $77.5–$80.0 billion. Analysts had been modeling $79.14 billion in revenue.
From an operational standpoint, the quarter featured the restart of F-16 deliveries, expanded C-130 manufacturing, and ongoing advancement of the Grizzly counter-unmanned aerial system.
Business Unit Performance Outlook
The Aeronautics division is forecasted to deliver $31.7–$32.7 billion in annual revenue, with mid-single-digit percentage growth anticipated in the latter half driven by expanded F-35 manufacturing.
Missiles and Fire Control is projected to contribute $16.5–$16.9 billion, with momentum building in the second half as munitions manufacturing scales up.
Rotary and Mission Systems is guided toward $17.7–$18.1 billion in sales, bolstered by radar system contracts and increased Sikorsky helicopter production.
Management raised the Space segment forecast to $13.85–$14.05 billion, with expansion linked to the Next Generation Interceptor and Fleet Ballistic Missile initiatives.
Derivatives market activity suggests bullish sentiment among traders. The put-to-call ratio for January expiration contracts stands at 0.67x — indicating optimistic positioning. The highest strike prices on these contracts approach $645, suggesting potential appreciation exceeding 14% from present levels through the next half-year.
The analyst community maintains a “Moderate Buy” rating on LMT shares, with the average price target hovering around $611 — approximately 7% above Friday morning’s trading level.
The company currently offers shareholders a dividend yield of 2.42%.
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