Remember me
In a year marked by volatility and uncertainty, Lockheed Martin (LMT 1.88%) has been a bright spot in the market thus far. Shares of Lockheed are up over 26% in 2026, far outpacing the broader market indexes.
Today's Change
(-1.88%) $-11.82
Current Price
$615.51
With Lockheed's valuation rising, is the stock still a buy?
Lockheed's financials have been somewhat of a mixed bag, but there are several positive signs in the latest quarterly report. The company's backlog is a massive $194 billion, sales grew 6% year over year, and free cash flow exceeded expectations.
The bull case for Lockheed depends on military spending steadily increasing. The Trump administration has proposed a defense budget of up to $1.5 trillion for 2027, a marked increase from the $900 billion appropriated for 2026. This policy shift could generate a substantial number of new contracts for Lockheed.
Image source: Getty Images.
Unfortunately, Lockheed's valuation metrics have risen to the point where the stock is teetering on the edge of overvaluation. The stock's trailing P/E ratio is nearing 30. In the past 12 months, the company's market capitalization has increased from $104 billion to $144 billion.
If you're taking a long-term view, though, the current share price shouldn't scare you away. Lockheed's guidance for 2026 maintains a sales growth rate of 5% and segment operating growth of 25%.
Lockheed's dividend yield is fairly strong at 2.2%. This stock has a lot to offer investors seeking stable growth and income, even though its recent run has made shares more expensive.
Catie Hogan has no position in any of the stocks mentioned. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.