How Did Lockheed Martin Fare In Q1?

Lockheed Martin (NYSE: LMT) announced its first-quarter 2025 results, surpassing analyst expectations for both revenue and earnings. The company reported revenue of $18.0 billion and adjusted earnings per share of $7.28, exceeding consensus estimates of $17.8 billion and $6.30, respectively. This strong performance was primarily driven by increased sales in its tactical and strike missile programs, coupled with improved profitability. Furthermore, the company reaffirmed its financial outlook for the full year 2025.

Following the positive earnings report, LMT’s stock price increased by 3% in the pre-market, but declined later amid investor concerns over the impact of tariffs. Despite a year-to-date return of -5% in 2024, LMT stock has slightly outperformed the S&P 500 index this year, which has declined by 12%. The ongoing Russia-Ukraine war and tensions in the Middle East have fueled investor interest in select defense stocks. But, if you are looking for an upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

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How Did Lockheed Martin Fare In Q1?

Lockheed Martin’s revenues reached $18.0 billion in Q1, representing a 4% year-over-year increase. Examining performance by segment, the Missiles and Fire Control (MFC) division experienced the most significant growth, with a 13% rise in sales driven by increased production of missile programs such as the Long Range Anti-Ship Missile (LRASM) and Joint Air-to-Surface Standoff Missile (JASSM). Aeronautics sales also trended upward, increasing by 3%, primarily due to higher volumes under the F-35 production contract. The Rotary & Mission Systems (RMS) segment saw a 6% sales increase, supported by higher volume on the Canadian Surface Combatant (CSC) and radar programs. In contrast, the Space segment experienced a 2% revenue decline, primarily due to lower volume in the Next-Generation Overhead Persistent Infrared program.

Overall, Lockheed Martin’s operating margin improved by 140 basis points to 13.2% in the first quarter. This expansion in profitability contributed to a bottom line of $7.28 per share, reflecting a 15% year-over-year increase. Looking ahead, Lockheed Martin reaffirmed its 2025 outlook, anticipating full-year sales of $74.25 billion and earnings per share of $27.15 at the midpoint of its guidance.

What Does This Mean For LMT Stock?

Following a strong first-quarter performance and the reaffirmation of its 2025 outlook, Lockheed Martin’s stock experienced a boost after the earnings announcement. However, examining its performance over the past four years reveals a less consistent picture. While the stock delivered returns of 3% in 2021, a significant 40% in 2022, a decline of -4% in 2023, and 10% in 2024, its overall volatility during this period has largely mirrored that of the S&P 500.

In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is less volatile. And it has comfortably outperformed the S&P 500 over the last four-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Considering the current uncertain macroeconomic climate with tariffs and ongoing geopolitical tensions, the question arises whether LMT could face a period of underperformance relative to the S&P 500 over the next year, similar to what was observed in 2021, 2023, and 2024, or if it is poised for significant growth. While we plan to update our LMT model to incorporate the latest earnings, our initial assessment is that the company’s strong recent performance suggests further upside potential for the stock.

Currently trading at a price-to-earnings (P/E) ratio of 16x its trailing earnings, LMT’s valuation is below its five-year average P/E of 18x. Furthermore, anticipated increases in the defense budget, particularly under a potential Trump administration, are expected to benefit defense contractors like LMT. Therefore, despite its recent gains, we believe that investors are likely to achieve robust long-term returns by investing in LMT stock.

While LMT stock looks like it has more room for growth, it is helpful to see how Lockheed Martin’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

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