Lockheed Martin Corp (LMT) Executive Summary Lockheed Martin demonstrates strong cash flow generation and high return on equity, but faces revenue pressures and margin retrenchment that warrant close monitoring. Financial Highlights Revenue of $67.6B in 2023 and $61.8B expected in 2024 Operating cash flow (TTM): $7.92B Return on equity: 64.0% as of 2026‑03‑29 Cash Flow & Capital Allocation The com
Lockheed Martin demonstrates strong cash flow generation and high return on equity, but faces revenue pressures and margin retrenchment that warrant close monitoring.
The company shows clear strengths in cash generation and earnings quality: operating cash flow on a trailing‑12‑month basis was $7.92B versus a most‑recent net income (TTM) of $4.79B, indicating cash conversion above reported earnings (Earnings Quality Analysis). Interest coverage remains comfortable at 6.63x, supporting debt service capacity even as financing activity has been material; financing cash flow improved from −$7.33B (2023 TTM) to −$4.14B (2024 TTM), representing a significant inflection (Strategic Capital Allocation).
The debt/equity ratio of ~2.66 indicates elevated leverage and higher capital structure risk, despite healthy interest coverage (Strategic Capital Allocation).
Trends in revenue and net income (Revenue & Net Income); trends in diluted EPS and revenue‑per‑share (EPS Diluted & Revenue per Share); margin trajectories across gross, operating and net margins (Profit Margin Trends); operating cash flow relative to net income and changes in financing cash flow (Earnings Quality Analysis and Strategic Capital Allocation); ROE movement (Return on Equity (ROE)); and the trailing P/E ratio, currently 35.8x (2026‑03‑29) (Price-to-Earnings (PE) Ratio Trend).
The foundation of business quality and long-term value creation
LOCKHEED MARTIN CORP’s reported revenue shows a recent decline from $67.57B for the period ending 2023-12-31 to $61.78B for the period ending 2024-12-31, after several years of overall growth from earlier years (for example, $39.99B at 2017 year-end). The most notable inflection in the revenue series in the provided data is the drop between the 2023 and 2024 year-end figures.
Net income has exhibited quarter-to-quarter volatility with pronounced year-end totals. Recent quarters show net income of $1.54B (2024-03-31), $1.64B (2024-06-30), $2.15B (2024-12-31), $1.71B (2025-03-30) and a larger $3.31B at 2025-12-31, followed by $1.49B in the most recent quarter (2026-03-29). The series includes both higher year-end totals (e.g., $3.55B at 2023-12-31, $3.65B at 2022-12-31) and lower quarterly outliers (e.g., $309.0M at 2022-06-26).
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Period Information
Report Type: Annual (10-K)
Period: Jan 2024 to Dec 2024
Analyzing long-term margin stability and competitive positioning
LOCKHEED MARTIN CORP's reported margins show a clear improvement from the 2010 period to 2023, with gross margin rising from 8.4% in 2010 to 12.5% in 2023 and net profit margin rising from 6.4% to 10.2% over the same span. Operating margin is reported at 12.6% for 2023 (no 2010 comparable in the provided data).
In the most recent 12-month period ending 2024-12-31, all three margins declined versus 2023: gross margin fell by 1.3 percentage points to 11.2%, operating margin fell by 1.2 percentage points to 11.4%, and net profit margin fell by 1.6 percentage points to 8.6%.
Understanding Profit Margins
Between Jan 2024 and Dec 2024, Lockheed Martin Corp converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Over the most recent quarters, LOCKHEED MARTIN CORP's trailing twelve‑month net income has moved lower from mid‑2023/mid‑2024 peaks around $6.7–6.8B to a series of declines through 2024–2026: $6.78B (2024‑03‑31), $6.74B (2024‑06‑30), $5.34B (2024‑12‑31), $5.50B (2025‑03‑30), $5.02B (2025‑12‑31) and most recently $4.79B (2026‑03‑29). The recent trend shows net income trending downward with the latest quarter at the lowest level in the provided series.
Operating cash flow on a TTM basis, where available, has generally exceeded reported net income in the dataset. The most recent reported operating cash flow TTM in the file is $7.92B (period end 2023‑12‑31), which exceeded the contemporaneous net income of $6.92B at that date. The most recent Net Income (TTM) was $4.79B (period end 2026‑03‑29) and the most recent Operating Cash Flow (TTM) in the dataset was $7.92B (period end 2023‑12‑31).
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
Over the most recent quarters, LOCKHEED MARTIN CORP's trailing‑twelve‑month ROE has moved lower: 101.2% at 2023‑12‑31, 84.3% at 2024‑12‑31, and 64.0% at 2026‑03‑29, showing a clear downward slope across the last three reported periods.
The series is highly volatile over the longer term, with extreme peaks in 2018–2019 (348.2% at 2018‑12‑31, 267.6% at 2019‑03‑31, 242.0% at 2019‑06‑30), intermediate highs around 2020–2021 (113.2% at 2020‑12‑31, 109.8% at 2021‑03‑28), and lower but still elevated readings through 2022–2024. The most recent reported Return on Equity (ROE) was 64.0% for the period ending 2026‑03‑29.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Over the most recent trailing-twelve-months in the dataset, LOCKHEED MARTIN CORP's operating cash flow has been in the high single-digit billions, rising modestly from $7.80B (2022 TTM) to $7.92B (2023 TTM) after a prior peak of $8.18B in 2020.
Financing cash flow has been a consistent net outflow in recent years, worsening to -$7.33B in the 2023 TTM before improving to -$4.14B in the 2024 TTM; the move from -$7.33B to -$4.14B represents the most notable recent inflection in financing activity.
Investing cash flow data in the provided series is limited and shows net cash used in investing in the mid-2010s (‑$985M in 2016 and -$1.10B in 2017), with no more recent investing TTM values included.
The latest observed values were: Operating Cash Flow (TTM) $7.92B (period end 2023-12-31); Investing Cash Flow (TTM) -$1.10B (period end 2017-06-25); Financing Cash Flow (TTM) -$4.14B (period end 2024-12-31).
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
LOCKHEED MARTIN CORP's trailing twelve-month P/E has risen sharply over the most recent quarters after a period of mid-teens to high-teens readings. From 19.9x at 2024-06-30 it increased to 26.1x by 2024-12-31, dipped to 23.3x in 2025-03-30, then resumed an upward trajectory to 27.6x at 2025-12-31 and 35.8x at 2026-03-29, showing the strongest increase in the latest two quarters.
Across the longer series shown, the P/E was generally in the mid-teens for several years (many quarters between roughly 14x—16x) before the step-up beginning in 2023–2024. The most recent Price-to-Earnings (P/E) ratio was 35.8x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.