Lockheed Martin surges on record backlog, 2026 guidance raise
Defense contractor raises 2026 EPS forecast 37% after Q4 revenue beats expectations by 9.7%
Lockheed Martin shares rose on Thursday after the defense contractor reported better-than-expected quarterly revenue and raised its 2026 earnings guidance by 37%, highlighting robust demand for military hardware despite a pension-related earnings miss.
The company reported fourth-quarter revenue of $20.3 billion, surpassing analyst estimates of $18.5 billion by 9.7%, according to Lockheed Martin's investor relations materials. However, adjusted earnings per share of $5.80 fell short of the $6.35 consensus estimate, weighed down by a $479 million pension settlement charge that obscured underlying operating performance.
The stronger revenue and backlog expansion overshadowed the earnings shortfall, as management boosted 2026 earnings per share guidance to a range of $29.35 to $30.25, up from $21.49 in fiscal year 2025. The company also increased its free cash flow forecast to between $6.5 billion and $6.8 billion, signaling confidence in its ability to convert strong orders into cash.
Perhaps most notably, Lockheed Martin's order book swelled to a record $194 billion, representing a 10% increase from the prior year and providing visibility into future revenue streams. The growing backlog reflects sustained defense spending priorities among U.S. allies and continued procurement of advanced weapons systems and aircraft.
"We delivered another strong year of operational performance while capturing significant new business and advancing our portfolio of next-generation technologies," Lockheed Martin stated in its earnings announcement. "Our record backlog positions us well for sustainable growth and cash generation in the years ahead."
For 2026, the company projected sales between $77.5 billion and $80 billion, according to analyst coverage of the results. The guidance raise reflects both improved operating performance and expectations for higher-margin programs ramping up production.
The stock closed at $597.27 on January 29, 2026, just shy of its 52-week high of $596.23 and well above its 52-week low of $404.05. The shares have gained more than 47% over the past year, outperforming the broader industrials sector as investors have rotated toward defense stocks amid geopolitical tensions and increased military spending by NATO members.
Despite the strong performance, some analysts view the stock as expensive relative to near-term targets. The consensus analyst price target of $569.68 sits below the current trading level, according to market data, suggesting limited upside from current prices. The stock trades at a trailing price-to-earnings ratio of 33.11, though the forward multiple of 19.68 is more moderate against the raised guidance.
Institutional investors hold nearly 75% of Lockheed Martin's outstanding shares, reflecting its status as a core holding in many large-cap portfolios. The company also pays a dividend yielding 2.27%, providing additional return for income-focused investors.
The strong results and optimistic guidance come as global defense budgets continue to expand, driven by ongoing conflicts in Eastern Europe and the Middle East, as well as the U.S. military's modernization priorities. Lockheed Martin's diverse portfolio, which includes the F-35 fighter jet, missile defense systems, and space technologies, positions the company to benefit from sustained spending across multiple defense categories.
Looking ahead, investors will be watching for updates on key program milestones, particularly the F-35's production ramp-up and potential international orders, as well as progress on next-generation hypersonic weapons and space systems that could drive future growth.