Multiple initiatives undertaken by Lockheed Martin (LMT) leave it well-positioned to benefit profusely from the Trump administration's massive anti-missile initiative, Golden Dome, and from the administration's strong emphasis on missile defense more generally. Further, the demand for LMT's jets appear to be strong, and it should also get a sizable bounce from its drone business over the lower term. Finally, the valuation of LMT stock is quite low and attractive.
In light of these points, LMT stock is very attractive for long-term value investors, despite the company's unimpressive Q1 results that were negatively impacted by logistical issues that should be alleviated in the longer term.
About Lockheed Martin
The company is the world's largest defense contractor, selling fighter jets, missile systems, and precision weapons to the Pentagon and America's allies.
In the first quarter, the firm's revenue was little changed versus the same period a year earlier and came in at $18 billion. Its net earnings dropped to $1.5 billion last quarter versus $1.7 billion in Q1 of 2025.
LMT has a market capitalization of $120 billion and a forward price-to-earnings ratio of 17.43 times.
LMT, the Golden Dome Project, and Another Missile-Defense System
According to a new study released by the Congressional Budget Office, Golden Dome may cost about $1.2 trillion in the course of 20 years. That's way above the $175 billion estimate previously made by Trump.
In any case, the program is likely to positively move the needle for Lockheed Martin stock.
Last month, the defense giant was one of 12 firms selected by the Pentagon's Space Force “to develop space-based interceptor (SBI) prototypes for….Golden Dome. ” According to one assessment, about 70% of the over $1 trillion likely to be provided to Golden Dome contractors will be used to support the “space-based interceptor program.”
Notably, Lockheed has created “a comprehensive hypersonic missile defense system.” This offering is likely to be incorporated into Golden Dome, since a number of America's enemies have developed hypersonic missiles.
Outside of Golden Dome, LMT has been a big beneficiary of the administration's anti-missile efforts. Last month, the Army awarded Lockheed a $4.76 billion contract for the firm's PAC-3 missile-defense offering, while the Navy has been preparing to incorporate the system in its Aegis weapons system for the first time.
And boding well for the PAC 3's future revenue-generating capabilities, LMT made a deal to “more than triple (the) production capacity” of the system between early 2026 and the end of 2030. Similarly, the firm agreed in January to quadruple its production of the interceptors for another missile-defense system, THAAD.
LMT's Jet Business Looks Strong and Its Drone Business Is Very Promising
Last year, Lockheed delivered a record-setting 191 of its F-35 fighter jets, and already this year, Israel announced that it would double its order of the jets from 50 to 100, while Peru intends to obtain 12 F-16s from the defense giant.
On the drone front, Lockheed's RQ-170 Sentinel stealth drones were used in America's operation against Venezuela earlier this year. Given the success of that mission, the Pentagon is likely to look to buy many more of these drones in the not-too-distant future. Additionally, the company is developing a counter-drone system called Sanctum that utilizes “advanced AI.”
With America, Israel, and likely many other countries urgently looking for cost-effective means of defending themselves against drones, Sanctum could be a big hit for LMT. And the firm has created an “undersea drone” that can be used to combat enemy ships.
Also importantly, the Pentagon is looking to purchase more than 300,000 drones in the coming years, including “hundreds of thousands of (drones) by 2027.” Because of Lockheed's drone ventures, it's well-positioned to benefit from the agency's emphasis on the aircraft.
LMT's Q1 Results and Its Favorable Valuation
In many respects, the company's Q1 results were unimpressive. But its earnings were dragged down by multiple, logistical issues that are likely to be resolved in the short-to-medium term. For example, the F-16 suffered “production performance and development delays,” while its C-130 transport plane had “continued diminishing manufacturing source integration challenges and associated delivery delays.”
On the date of publication, Larry Ramer did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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