Should Investors Chase LMT Stock After Its 15.5% Three-Month Gain?

Lockheed Martin’s LMT shares have risen 15.5% over the past three months, outperforming the Zacks Aerospace-Defense industry’s growth of 12.2%. The company’s record backlog, expanding munitions capacity and alignment with U.S. and allied defense priorities support durable growth.
 

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Shares of other defense stocks, such as General Dynamics GD and RTX Corporation RTX, have also risen during the same period. Shares of General Dynamics and RTX have risen 10.5% and 26.1%, respectively, over the same time frame.

Considering Lockheed Martin’s outperformance, investors might be left wondering if this is a good time to add LMT stock to their portfolio. Let's examine the factors that contributed to the share price gain and assess the stock's investment prospects to make an informed decision.

Tailwinds for LMT Stock

Lockheed Martin stands out for its broad portfolio and the scale of its established franchises, including the F-35, PAC-3, THAAD, PrSM, HIMARS, Aegis and strategic space programs. Its combat-proven systems and willingness to invest in production capacity before formal awards also strengthen its ability to respond quickly as customer priorities shift.

LMT is converting elevated demand into longer-duration awards that improve revenue visibility and support capacity planning. Backlog reached a record $230 billion as of June 28, 2026, after the company booked $65 billion of second-quarter orders and achieved a 3.2 book-to-bill ratio. The total includes a seven-year, $35 billion contract to quadruple THAAD interceptor production, alongside new GMLRS, HIMARS, radar and space awards. Management said this contract base should fuel sales growth for years.

International customers represented 28% of LMT’s 2025 sales, providing a broad demand base beyond U.S. programs. The company is extending that presence through co-production and regional sustainment initiatives. It signed an agreement with Rheinmetall to pursue ATACMS production in Europe and is supporting exploration of a dedicated European PAC-3 maintenance facility.

On July 29, the U.S. Department of War awarded Lockheed Martin a seven-year, multiyear contract worth up to $58.62 billion to produce PAC-3 MSE Patriot interceptor missiles under its Acquisition Transformation Strategy. The funding also supports LMT’s plan to triple PAC-3 MSE production by 2030 and expand employment at its Camden, AR, facility by roughly 50%. This improves operating leverage while positioning the company to benefit from sustained global demand for advanced air and missile defense systems amid rising geopolitical tensions.

Challenges for LMT Stock

Lockheed Martin remains exposed to cost-estimate and schedule risk on complex programs, especially under fixed-price arrangements. Second-quarter 2026 results benefited from the absence of the $1.6 billion in reach-forward losses recorded in the prior-year period, rather than reflecting the elimination of the underlying execution risk. Aeronautics also recorded $160 million of lower net favorable profit adjustments. 

Management cited F-16 and C-130 program challenges as factors affecting Aeronautics margins, while lower initial booking rates on new contracts may weigh on profitability. The company also retains existing classified and helicopter program exposures on its balance sheet, which could continue to generate additional program losses over time if cost, scope or approval assumptions deteriorate.

Estimates for LMT Stock

The Zacks Consensus Estimate for 2026 earnings per share (EPS) indicates year-over-year growth of 31.1%. LMT’s long-term (three to five years) earnings growth rate is 19.19%.
 

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The Zacks Consensus Estimate for General Dynamics’ 2026 EPS indicates year-over-year growth of 9.2%.  GD’s long-term earnings growth rate is 10.2%. The Zacks Consensus Estimate for RTX’s 2026 EPS indicates year-over-year growth of 14.6%. RTX’s long-term earnings growth rate is 11.64%.

LMT’s Earnings Surprise History

The company beat on earnings in three of the trailing four quarters and missed in one, delivering an average surprise of 8.85%.

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LMT’s Debt Position

Currently, the company’s total debt to capital is 70.08%, higher than the industry’s average of 47.1%.

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LMT Stock Trades at a Discount

In terms of valuation, LMT’s forward 12-month price-to-sales (P/S) is 1.64X, a discount to the industry’s average of 2.69X. This suggests the stock is trading at a lower valuation relative to its projected sales growth compared with its peer group.

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What Should an Investor Do Now?

Lockheed Martin continues to strengthen its leadership in missile defense and advanced military systems through a broad portfolio, expanding international partnerships, and long-term contract wins that enhance revenue visibility and support sustained production growth. The company is also increasing manufacturing capacity and investing in its industrial base, positioning it to capitalize on rising global demand for air and missile defense solutions driven by higher defense spending and geopolitical tensions.

Considering its financial pressures and current debt levels, new investors should wait and watch for a better entry point. Investors who already own this Zacks Rank #3 (Hold) stock may consider retaining it, given the company’s earnings growth outlook and price performance.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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