Should You Sell Your Lockheed Martin Stock Now?

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Lockheed Martin (LMT) stock returned 22.9% from September 29 to October 28, against 1.0% for the S&P 500. The stock rose 7.0% on October 22, the day the company reported a record backlog of $292 billion. Holders who stay are betting that those orders, led by PAC-3 missiles, turn into faster sales and a higher profit on each sale. Is Lockheed turning those orders into sales yet?

Lockheed Martin’s Sales Growth Has Sped Up

For two quarters now, yes. Lockheed’s sales rose 11.3% from a year earlier in fiscal Q3 2026, faster than the 8.8% growth in the same quarter of 2025. Sales grew 10.5% in fiscal Q2 after seeing almost no growth in fiscal Q1.

Orders are still coming in faster than sales, though. The backlog grew by $113 billion from a year earlier. Management said on the October 22 call that new orders in the quarter were four times the quarter’s sales. The largest addition was a seven-year PAC-3 award, which lifts the total value of that PAC-3 contract to up to $58.6 billion. The results release said $52.5 billion of the backlog is tied to that award.

So management expects more. The company raised its 2026 sales outlook to $80 billion to $82 billion, and said it sees high single-digit revenue growth in 2027. Management also expects sales at Missiles and Fire Control, its missile business, to grow at a mid-teens rate a year over the next five years. Those are forecasts, not results.

Is Lockheed Martin Earning More On Each Sale?

Not yet. Lockheed’s operating margin was 11.8% in fiscal Q3 2026, slightly below the 12.3% of a year earlier. The faster sales did not lift the margin.

Profit growth differed across Lockheed’s units. Missiles and Fire Control grew sales and profit by 24% each from a year earlier. At Aeronautics, sales rose 13% but profit rose 9%. Management said cuts to expected profit on the F-16 and C-130 programs offset part of the higher volume.

Over the past twelve months the margin was the same 11.8%, against 18.5% for the S&P 500 as a whole. Even with its missile business growing fast, Lockheed keeps a smaller share of each sale than the index does.

What Is Missing From Lockheed Martin’s P/E?

Possibly the next F-35 contracts. Lockheed stock trades at 22.3 times its earnings over the past twelve months. That multiple is close to 22.6 for the S&P 500, and the next F-35 production lots are not signed yet.

News reports said on October 22 that Lockheed and the Pentagon struck an initial deal to produce 850 F-35 jets, though it is not yet a signed contract for the next lots. Management said the deal sets a path to that many U.S. aircraft over ten years. But management trimmed its 2026 profit outlook for Aeronautics slightly because it now expects the next F-35 lots to be awarded later. A Lot 20 contract signed in 2026 would lift almost every figure in the 2026 outlook, management said, because that outlook does not count on one.

If the margin does not rise, Lockheed’s earnings can only grow about as fast as its sales. Buyers today are paying about the market’s multiple for those earnings. If the F-35 lots slip again, Aeronautics would book those sales later than it now plans.

Lockheed’s sales growth has picked up, while its operating margin has not risen with it. Management plans to give its 2027 outlook in January, the month Lockheed is expected to report. The operating margin in that report, against 11.5% in fiscal Q4 2025, is the number to watch.

Does This Mean You Should Act On LMT?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

There is a smarter approach. Since its inception, the Trefis High Quality (HQ) Portfolio has returned 105%, beating the benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking. If that is how you want to invest, the HQ Portfolio is the place to start.

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