What Is Lockheed Martin Building That Investors Should Watch?

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Lockheed Martin (LMT) stock returned 31.7% over the past year, compared with 15.0% for the S&P 500. The company is still putting the pieces in place that could move the stock from here, adding more factory space, thousands of new workers and large new contracts with its suppliers. These investments are arriving ahead of the sales they are meant to support. Which business is all that new capacity for, and is it already selling more?

Lockheed Martin Is Adding Capacity To Make Missiles

Much of the new capacity is directed toward Missiles and Fire Control, the missile business, and that segment is already selling more. Management said on the October 22 call that the division posted a 24% increase in both sales and profit in fiscal Q3 2026 from a year earlier, as production ramps on munitions programs ran ahead of schedule.

The expansion is well underway. Lockheed is hiring and training more than 3,000 people across its missile sites in 2026. On October 14, the company said it is investing $300 million to expand its Grand Prairie, Texas, operation to more than 735,000 square feet to make munitions. The largest contract of the quarter was a seven-year deal for PAC-3 interceptors, worth up to $58.6 billion in total.

How Big Could Lockheed Martin’s Missile Sales Get?

Over the next five years, management is targeting mid-teens yearly sales growth for the missile business. The segment recorded $15.3 billion in sales in fiscal 2025. The entire company sold $75.0 billion that year, and Aeronautics, at $30.6 billion, is still the largest segment.

Management raised its 2026 sales range for the missile business to $17.25 billion to $17.45 billion. Lockheed expects total 2026 sales of $80 billion to $82 billion, meaning the missile business would still account for only about a fifth of the company.

Lockheed’s orders stretch far beyond a single year of sales. The company ended the third quarter with a record backlog of $292 billion, up $113 billion from a year earlier. Out of that total, $52.5 billion is tied to the multi-year PAC-3 award, whose full value runs up to $58.6 billion.

On October 27, the stock closed 6.8% below its highest close of the past year. It trades at 22.0 times earnings, roughly level with the 22.6 multiple for the S&P 500. At about the market’s multiple, the share price appears to assume growth close to an ordinary company’s.

Can Lockheed Martin Sign More Long-Term Missile Contracts?

Lockheed is still negotiating more long-term missile contracts. Management said on the October 22 call that it will go through with the new missile agreements only if they are as good as or better than its current way of doing business. Management also called the missile backlog very firm.

Management said its suppliers need to move at the same pace as Lockheed scales production. In fiscal Q3 2026, Lockheed placed a $4.7 billion contract with L3Harris for PAC-3 propulsion. After the quarter closed, the company awarded Boeing $14.7 billion to triple PAC-3 seeker production.

Lockheed Martin is expected to report in January 2027. Management will provide its 2027 outlook then, and the sales range for the missile business is the number to watch.

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