Can Lockheed Martin Stock Compound Your Money?
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Shares of Lockheed Martin (LMT) returned 33.3% over the year to November 3, 2026, outpacing the 11.9% return for the S&P 500. The company continually repurchases its own stock, reducing its diluted share count by 7.5% over the three years to September 2026, so each remaining share owns a bigger slice of the business. How much has that smaller share count added to what each share earns?
Each Lockheed Martin Share Earns More Despite Lower Profit
Lockheed Martin’s earnings per share grew 0.94% a year over the three years to September 2026, even as its net income fell 2.2% a year. The smaller share count explains most of that annual difference of about 3.2 percentage points.
The pace of those repurchases has slowed every year. After falling 5.6% in the twelve months to September 2023, the share count declined by 4.6% in the following twelve months. It then dropped 2.4%, and fell only 0.56% in the twelve months to September 2026. Lockheed spent $0.75 billion on buybacks during that latest stretch, compared with $7.21 billion in the twelve months to September 2023. Net buying amounted to just 0.27% of the company’s market value after accounting for what it spent on stock pay for employees.
Lockheed Earns Twice As Much Cash As It Returns
Surplus cash funds Lockheed Martin’s buybacks and dividends. The company generated $8.38 billion in free cash flow over the twelve months to September 2026, or 2.1 times the $3.96 billion returned to shareholders. Based on the November 3 close, that free cash flow equated to about $57 a year for every $1,000 of stock.
A growing business generates this cash. Revenue climbed 7.9% to $79.1 billion over those twelve months, and the operating margin reached 11.8%, compared with 8.3% a year earlier. Management said third-quarter sales rose in every segment, including F-35 production, and the company ended September with a record backlog of $292 billion.
Dividends now make up most of what Lockheed hands back to investors. The company paid out $3.21 billion over the twelve months, more than four times its buyback spending. The board raised the quarterly dividend to $3.60 a share in October, marking the company’s 24th consecutive year of dividend increases.
Lockheed Martin Has Other Calls On Its Cash
Lockheed Martin carries moderate debt relative to its earnings. Net debt stood at $14.5 billion at the end of September 2026, representing about 1.4 times a year’s EBITDA, its earnings before interest, taxes, depreciation and amortization. Operating profit covered the interest bill 8.6 times over the past twelve months.
The larger demands on Lockheed’s cash lie elsewhere. Management said the company invests in the business first and returns cash to shareholders second. Lockheed plans to fund its Ultra Maritime acquisition with cash on hand when the deal closes in the fourth quarter of 2026, and it expects a required pension contribution of more than $1 billion in 2027. The company is also investing more than $8 billion through 2030 in its facilities, supply chain and workforce. The U.S. government began its fiscal 2027 under a continuing resolution, which management said affects the timing of new work but not the direction of demand.
Management now expects free cash flow of $7.8 billion to $8.0 billion for 2026. The range is up from $7.1 billion in July. It is below the $8.38 billion of the latest twelve months, which points to a smaller fourth quarter than the $2.76 billion of late 2025. This metric is the figure to watch when Lockheed Martin reports in January 2027 and issues its specific guidance for 2027.
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