Should L3Harris Stock Holders Look At Lockheed Martin Instead?
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If you own L3Harris Technologies (LHX) for the missile build-up, Lockheed Martin is the company buying its rocket motors. The rush to produce interceptors such as PAC-3 and THAAD draws buyers to both stocks. The two contractors part ways in how they earn from it. Lockheed Martin builds the missiles, while L3Harris supplies propulsion and expects far more 2026 revenue from its Space & Mission Systems segment, at $11.9 billion, than from Missile Solutions, at $4.1 billion. What did each company tell investors when it reported in October?
Both Raised 2026 Forecasts, But L3Harris Cut 2028 Cash
Both companies raised their 2026 forecasts, but only Lockheed Martin raised its cash forecast with them. Lockheed Martin now expects 2026 sales of $80 billion to $82 billion, up from the range it gave in July. The company also lifted its free cash flow forecast to $7.8 billion to $8 billion, from $7.1 billion.
L3Harris raised the low end of its 2026 revenue forecast by $300 million, moving the target to $23.5 billion to $23.7 billion. It lifted its earnings per share forecast to $12.25 to $12.35, up from $11.80 to $12. The company kept its 2026 free cash flow forecast at $3 billion.
L3Harris now expects 2028 free cash flow of $3 billion, down from $3.5 billion. Management said the single biggest reason is a plan to pay its 401(k) contributions in cash instead of regularly issuing $250 million of new stock. The company said this shift will limit dilution. Lockheed Martin’s raise lifted the cash it expects for 2026, while L3Harris gave up some future cash to issue fewer shares.
Both Are Spending To Build Missiles, On Different Terms
Both companies are paying up front for the missile ramp. L3Harris called its third-quarter capital spending of $179 million historically elevated as it builds out missile capacity, and the contractor plans to triple its THAAD solid rocket motor deliveries in 2027. Lockheed Martin is investing more than $8 billion through 2030 in its facilities, its supply chain and its workforce.
Some of that demand reaches L3Harris directly. Lockheed Martin placed a $4.7 billion supply contract with L3Harris for PAC-3 propulsion during the third quarter. The contract’s total value equals about a fifth of the $23.3 billion L3Harris reported in revenue over its latest twelve months.
Lockheed Martin has an annual escalator tied to an industry inflation index in its long-term munitions agreements. Management said a recovery mechanism would return its investments if the agreed volumes were later reduced by a future administration or Congress. L3Harris said the vast majority of the work it booked in the third quarter of 2026 was firm-fixed-price, and the company looks to efficient execution for extra margin. Lockheed Martin holds written protection against inflation and volume cuts. L3Harris aims to earn extra margin through its own execution.
Where Lockheed Martin Leads, And Where L3Harris Does
Lockheed Martin trades as the cheaper stock, at 22.6 times trailing earnings against 24.8 for L3Harris. It also carries less debt for its size, with total debt at 13.9% of its market value, compared to 21.9% for L3Harris. Over the latest twelve months, Lockheed Martin turned 11.8% of its sales into operating profit, against 10.7% for L3Harris. Lockheed Martin’s revenue grew 7.9% over the same stretch, running a little ahead of the 7.3% at L3Harris.
L3Harris holds the better record over a longer stretch. Its revenue growth averaged 7.8% across its last three twelve-month periods, against 5.4% for Lockheed Martin. L3Harris also kept 8.7% of its latest twelve months of sales as net profit, against 8.2% for Lockheed Martin. Across those three twelve-month periods, though, Lockheed Martin’s net margin averaged 7.8%, against 7.5% for L3Harris.
For an L3Harris holder, the measures lean toward Lockheed Martin on price, debt, operating margin and recent growth. L3Harris holds the longer growth record and the higher net margin. L3Harris’s twelve-month revenue growth set against Lockheed Martin’s is the figure to watch when both companies report in January 2027.
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