VALUATION HIGHLIGHTS

1. Aeronautics (U.S. Aeronautics, Non-U.S. Aeronautics) constitute 35% of the Trefis price estimate for Lockheed Martin's stock.
2. Missiles & Fire Control (US Missiles & Fire Control, Non-US Missiles & Fire Control) constitutes 29% of the Trefis price estimate for Lockheed Martin's stock.
3. Mission Systems & Training (US Mission Systems & Training, Non-US Mission Systems & Training) constitutes 20% of the Trefis price estimate for Lockheed Martin's stock.

WHAT HAS CHANGED?

Latest Earnings: Q4 and Full Year 2025

Lockheed Martin reported Q4 2025 revenue of $20.32 billion, representing a 9.1% increase year-over-year, which surpassed analyst estimates due to strong volume in the F-35 program and tactical missiles. Adjusted earnings per share (EPS) for the quarter came in at $5.80, a 161.3% jump from the prior year's $2.22, though it slightly missed consensus expectations due to non-operational pension charges. For the full year 2025, total sales reached a record $75.05 billion, up 6% from 2024, supported by a significant expansion in the Missiles and Fire Control segment and a record-high total backlog of $194 billion.

Note: Lockheed Martin's FY'25 ended on December 31, 2025.

F-35 Modernization and Lot 17 Deliveries

The F-35 program continues to face technical friction as the company navigates the transition to the Technology Refresh 3 (TR-3) and Block 4 upgrades. Reports in February 2026 indicate that some aircraft are being delivered to the U.S. military in a "truncated" configuration or with temporary ballasts to maintain production tempo while the new AN/APG-85 radar and advanced software stabilize. Despite these hurdles, Lockheed delivered 191 F-35 jets in 2025 and expects the program to remain the primary revenue driver as it clears the backlog through 2026.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Lockheed Martin's value that present opportunities for upside or downside to the current Trefis price estimate:

Aeronautics

• Aeronautics Operating Margin: Operating margins in this segment expanded to 9.2% in Q4 2025, up 380 basis points year-over-year. Trefis estimates suggest that further stabilization of the F-35 production line could drive long-term margins back toward the 10-11% range, though persistent TR-3 software instability remains a primary downside risk.


• F-35 Delivery Volume: With 191 units delivered in 2025, Lockheed is operating at near-peak capacity. Continued international demand from NATO and Pacific allies provides upside potential, while any further U.S. government halts on accepting "truncated" jets could lead to revenue deferrals in late 2026.

For additional details, select a driver above or a division from the interactive Trefis split for Lockheed Martin at the top of the page.

BUSINESS SUMMARY

Lockheed Martin is the world's largest defense contractor, primarily serving the U.S. Department of Defense and international allies with high-end military platforms, missiles, and space systems. The business operates through four segments—Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS), and Space—leveraging long-term government contracts and a massive installed base to generate stable cash flows.

SOURCES OF VALUE

The company's valuation is heavily anchored in its technological dominance and its role as the sole provider for several critical national security programs.

Global Fighter Jet Monopoly

Lockheed Martin's Aeronautics segment is anchored by the F-35 Lightning II, the most expensive and advanced fighter jet program in history. With over 15 partner nations and a production run expected to last into the 2040s, this program creates a multi-decade revenue stream through both initial sales and high-margin sustainment services.

Missile Defense Dominance

The Missiles and Fire Control segment maintains a formidable moat through proprietary systems like the PAC-3 MSE and THAAD. As global geopolitical tensions rise, the company's framework agreements to quadruple interceptor production capacity ensure it remains the primary beneficiary of increased defense spending in Europe and the Indo-Pacific.

KEY TRENDS

Global Munitions Acceleration

Heightened regional conflicts have shifted focus from platform development to high-volume munitions production. Lockheed is pivoting its strategy to address this by breaking ground on new Munitions Acceleration Centers and scaling PAC-3 production to meet an annual target of 2,000 units, reflecting a broader industry trend toward "arsenal of democracy" capabilities.

Digital Warfare and AI Integration

Under its "21st Century Security" initiative, Lockheed is accelerating the integration of AI and 5G-enabled networking into its platforms. This strategy aims to transform traditional hardware into networked "software-defined" assets, as seen in the recent collaboration with Fujitsu and the launch of the Lamprey Multi-Mission Autonomous Undersea Vehicle.