Lockheed Martin (NYSE: LMT) reported its first-quarter 2025 results, beating analyst projections on both revenue and earnings. The company posted revenue of $18.0 billion and adjusted earnings per share of $7.28, surpassing the consensus estimates of $17.8 billion and $6.30, respectively. This outperformance was largely due to higher sales in its tactical and strike missile programs and improved margins. Additionally, the company reiterated its full-year 2025 financial guidance.
After the earnings announcement, LMT’s stock rose 3% in pre-market trading, though it later declined amid investor concerns surrounding tariffs. Despite a -5% year-to-date return in 2024, LMT shares have slightly outpaced the S&P 500 index, which is down 12% over the same period. Heightened geopolitical risks, including the Russia-Ukraine conflict and tensions in the Middle East, have sustained interest in defense stocks. For those seeking a more stable alternative to individual equities, the High-Quality portfolio has delivered returns exceeding 91% since inception, outperforming the S&P.
How Did Lockheed Martin Fare In Q1?
Lockheed Martin’s revenues totaled $18.0 billion in Q1, a 4% year-over-year rise. Segment-wise, the Missiles and Fire Control division led growth with a 13% increase in sales, fueled by higher production of systems like the Long Range Anti-Ship Missile and Joint Air-to-Surface Standoff Missile. Aeronautics revenue rose 3% due to increased deliveries under the F-35 contract. The Rotary & Mission Systems unit posted a 6% gain, supported by greater output on Canadian Surface Combatant and radar systems. However, the Space segment saw a 2% revenue decline, attributed to lower volumes in the Next-Generation Overhead Persistent Infrared program.
Overall, Lockheed Martin’s operating margin expanded by 140 basis points to 13.2% for the quarter. This margin improvement supported adjusted earnings of $7.28 per share, a 15% increase from the prior year. The company reaffirmed its 2025 guidance, expecting full-year revenue of $74.25 billion and earnings per share of $27.15 at the midpoint.
What Does This Mean For LMT Stock?
Following a strong Q1 and the reaffirmed 2025 forecast, Lockheed Martin’s stock saw an initial boost. However, performance over the past four years has varied: returns of 3% in 2021, 40% in 2022, a -4% decline in 2023, and a 10% gain in 2024. This volatility has roughly tracked that of the S&P 500.
By contrast, the Trefis High Quality Portfolio—comprising 30 carefully selected stocks—has exhibited lower volatility and strongly outperformed the S&P 500 in the same timeframe. What’s the reason? These companies consistently delivered higher returns with reduced risk, as reflected in HQ Portfolio performance metrics.
Given the current macroeconomic uncertainty—marked by tariffs and global conflict—questions arise about whether LMT may underperform the market again as seen in 2021, 2023, and 2024, or if it will build on its recent gains. While our LMT valuation model is set for an update post-earnings, preliminary analysis indicates the company’s strong Q1 supports potential upside for the stock.
At its current price-to-earnings (P/E) ratio of 16x trailing earnings, LMT trades below its five-year average of 18x. Expectations for increased defense spending—especially under a possible Trump administration—further enhance the outlook for defense firms like LMT. Thus, we believe investors may still find attractive long-term returns in LMT stock despite recent appreciation.
While LMT appears poised for further growth, it’s worth comparing how Lockheed Martin’s Peers perform across key financial metrics. For a broader industry overview, check out Peer Comparisons.
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