By Anton Ladnyi, CFA · ex-Goldman Sachs · ex-J.P. MorganPublished Updated
LMT — Lockheed Martin at ~$530 on ~18x FY2026E EPS with Q1 2026 EPS $6.44 missing consensus, FCF -$291M Q1, $186B backlog; FY2027 budget proposes F-35 +62%, PAC-3/MSE +8x, THAAD +9x — structural demand inflection; Citi cut PT to $571 (from $675); conviction Low on ongoing margin compression and EPS decline.
LMT Price Target & Rating
LMT's grade is Avoid, with moderate downside risk (CVaR -19.5%), and quality metrics (net margin 6%, ROE 68%). Lockheed Martin Corporation (LMT) trades at $525.02 with a valuation grade of Avoid: a trailing P/E of 25.4x at a 16% premium to sector median, net margins of 6.4%, a DCF-implied intrinsic range of $543–$857 suggesting a +33% margin of safety, beta 0.11 (defensive risk profile).
DCF Valuation Range
Key Takeaways
Valuation: Avoid grade — P/E 25.4x — DCF range $543–$857 implies +33% margin of safety
Risk: CVaR -19.5% (95th percentile, 1-month) indicates moderate tail exposure; beta of 0.11 amplifies broad market moves in both directions
Strengths: Size 4.0/5, 6% net margin, 68% ROE dominate the factor profile
Catalyst: Q2 2026 FCF recovery (target >$1B) confirming Q1 was timing; FY2027 NDAA passage with PAC-3/THAAD/THAAD funding intact; Golden Dome prototype contract award
Why AvoidTrading at a significant premium to intrinsic value — DCF and analyst consensus suggest limited margin of safety; valuation risk outweighs near-term upside
Main riskValue score 2.5/5 signals premium pricing relative to peers
Tail riskCVaR -19.5% over one month at the 95th percentile
DCF range$543–$857 intrinsic range; margin of safety +33%
Best useCore large-cap Industrials holding — not a source of diversified sector exposure
Next watchEarnings surprise deceleration trend — monitor next quarter delivery closely
Quantitative Factor Profile
Value
2.5 / 5
Quality
3.0 / 5
Momentum
3.0 / 5
Volatility
5.0 / 5
Size
4.0 / 5
Key Metrics
LMT Key Metrics — Lockheed Martin Corporation 2026
Metric
Value
Current Price
$525.02
P/E Ratio (TTM)
25.4x
Forward P/E
16.4x
P/S Ratio
1.6
EV/EBITDA
17.5
Beta
0.11
Net Margin
6.4%
ROE
67.6%
Debt/Equity
276.4%
Dividend Yield
2.63%
CVaR (95%, 1M)
-19.5%
Market Cap
$121.1B
Analyst View
Anton Ladnyi, CFA · A.L. Capital AdvisoryUpdated 2026-06-11
Rating Rationale
LMT — Lockheed Martin at ~$530 on ~18x FY2026E EPS with Q1 2026 EPS $6.44 missing consensus, FCF -$291M Q1, $186B backlog; FY2027 budget proposes F-35 +62%, PAC-3/MSE +8x, THAAD +9x — structural demand inflection; Citi cut PT to $571 (from $675); conviction Low on ongoing margin compression and EPS decline.
Investment Thesis
↑ Bull Case
$186B total backlog underpins multi-year revenue; Q1 $7B PAC-3 orders (incl. $4.8B undefinitized) signals production ramp commitment
FY2027 proposed budget (record $1.5T total): F-35 procurement line +62%, PAC-3/MSE production line +8x, THAAD +9x — most favorable LMT-specific budget in decades if passed by Congress
Golden Dome: LMT eligible for up to $3.2B aggregate space-based interceptor prototype awards; THAAD and PAC-3 infrastructure positions it as top beneficiary
FY2026 reconciliation: PAC-3 and THAAD production capacity being quadrupled; PrSM missiles quad-ramp underway — multi-year revenue tailwind locked in
Peru: $1.5B direct commercial F-16 sale; F-35 EW modification kits ($991M) and armament equipment ($879M) contracts awarded May 2026
↓ Bear Case
Q1 2026 FCF -$291M (vs +$955M Q1 2025) — management attributed to timing but investor trust eroded
F-35 Block 4 upgrade: $6B+ over budget, 5+ years behind schedule — persistent programme-level risk with DoD
Q1 EPS $6.44 vs $7.28 prior year (-11% YoY) on flat $18.0B revenue — zero organic growth in the world's largest defence boom; earnings declining
Citi cut price target to $571 (from $675, Neutral); stock at ~$530 well below 52-week high of $692
DOGE review scrutiny on F-35 sustainment and classified programmes
What Changes the Rating
↑Catalyst:F-35 Block 4 milestone on schedule; FCF >$1.5B single quarter; Golden Dome lead contract won
The rating on LMT is driven by a factor profile that is genuinely mixed — there is no clean narrative here, which is itself a signal worth taking seriously. What I watch on this name is earnings consistency — specifically whether delivery against consensus is stable or deteriorating. That is usually where the rating gets confirmed or challenged before the price reflects it. The scenario that changes my read is a genuine valuation reset — not a small pullback, but a re-rating that reflects the actual risk profile. Until that happens, the risk/reward is not there.
— Anton Ladnyi, CFA
Earnings History
LMT Earnings History — EPS Surprise Rate 2026
Quarter
EPS Est.
EPS Actual
Surprise
Q1 2026
$6.69
$6.44
-3.8% ✗
Q4 2025
$5.75
$5.80
+0.9% ✓
Q3 2025
$6.36
$6.95
+9.3% ✓
Q2 2025
$6.42
$1.46
-77.3% ✗
Quarterly EPS — Estimate vs Actual
Earnings Projections
LMT Forward EPS Consensus Estimates 2026
Quarter
EPS Est.
YoY EPS
Analysts
Q2 2026
$7.19
+392.5%
16
Q3 2026
$7.58
+9.1%
16
Q4 2026
~$8.68
+49.7%
20
Q1 2027
~$8.03
+24.7%
20
~ Estimated from annual consensus — not a direct analyst survey
LMT — P/E 25.4x · Beta 0.11 • Quantitative grade: Hold • CVaR from one-year daily history · historical simulation
DCF Scenario Analysis
Hover each scenario for detail · current price $525.02
▼
Bear Case
$475
-9.5%
Fwd P/E: 15.1x
1.0 revenue CAGR · 17.0 exit multiple
◆
Base Case
$610
+16.2%
Fwd P/E: 19.4x
4.0 revenue CAGR · 20.0 exit multiple
▲
Bull Case
$780
+48.6%
Fwd P/E: 24.8x
8.0 revenue CAGR · 24.0 exit multiple
Pairwise Correlation Matrix
2 of 10 peer pairs correlated above 0.60 — diversification benefit within this cluster is structurally limited.
Extended Analysis — Buy, Hold or Sell? Risk Factors. Portfolio Fit.
Is LMT a buy, hold, or sell?
LMT carries a valuation grade of Avoid. The trailing P/E of 25.4 sits 16% above the Industrials sector median of 22.0x — a premium that demands sustained earnings delivery. Our discounted cash flow model produces an intrinsic range of $543–$857 — implying a +33% margin of safety at the current price of $525.02. The width of the DCF range reflects genuine uncertainty in the terminal growth rate assumption: the correct framework is a probability-weighted distribution over scenarios, not a single point estimate. See the DCF valuation framework for full methodology.
With a 6% beat rate on recent quarters, earnings predictability has been mixed. The most recent quarter missed by a 3.8% earnings surprise. Analyst estimate revisions are trending upward.
What are LMT's key risk factors?
With a beta of 0.11, LMT exhibits a low-volatility risk profile relative to the broad market. The 95th-percentile CVaR of -19.5% on a one-month horizon should inform position sizing directly: at a 10% portfolio weight, this tail event contributes approximately 1.9% of total portfolio loss in the worst 5% of months. Net margins of 6.4% fall below the Industrials sector average of 11%, suggesting margin pressure. Return on equity of 67.6% indicates highly efficient capital allocation. Debt-to-equity of 276% warrants monitoring for leverage risk.
At 0.00, the put/call ratio skews bullish, with call buyers dominating recent flow. Implied volatility of 2.4% is below realized volatility of 19.0%, potentially making options relatively cheap. Insiders have been net sellers to the tune of $18.0M recently. While routine dispositions are common, the magnitude bears watching. Short interest is low at 1.4% of float, suggesting limited bearish conviction.
How does LMT fit in a diversified portfolio?
At typical HENRY portfolio weights — 10–20% of the equity allocation — LMT carries a beta of 0.11, meaning it amplifies broad market moves proportionally. The appropriate weight is not a function of conviction alone, but of the full covariance structure across all avoidings. See the Ledoit-Wolf covariance framework for the methodology behind these calculations.
Among closely correlated names, LMT shows the strongest co-movement with LHX (0.52), RTX (0.47), NOC (0.45). Investors seeking diversification should note these correlation dynamics when constructing multi-asset portfolios.
True portfolio risk is a function of the full covariance structure across all avoidings — not individual stock metrics. The Portfolio Health Check quantifies this at the portfolio level: it surfaces hidden concentration, marginal CVaR contributions, and the degree to which your overall allocation deviates from an optimal risk-adjusted mandate. The LMT analysis here is a single node in that larger structure.
Lockheed Martin Corporation (LMT) carries a Avoid quantitative rating from A.L. Capital Advisory, derived from Discounted Cash Flow intrinsic value analysis, five-factor model scoring (Value, Quality, Momentum, Volatility, Size), and CVaR tail risk measurement. At $525.02, the DCF midpoint margin of safety is +33% (intrinsic value range: $543 bear – $857 bull). Composite factor score: 3.5/5. Strongest factor: Volatility (5.0/5). Weakest factor: Value (2.5/5). Trailing P/E: 25.4x. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Portfolio Construction Framework →
What is the average analyst target price for LMT?
Wall Street consensus target for LMT: $625.16 (+19.1% upside from the current price of $525.02). The analyst target range spans $511.00 (most bearish) to $756.00 (most bullish). Consensus recommendation: Hold. Note that analyst price targets typically reflect a 12-month forward horizon and are derived from a blend of DCF, comparable-company, and sum-of-the-parts analysis. A.L. Capital Advisory’s quantitative Avoid rating is produced independently — from DCF intrinsic value, five-factor model scores, and CVaR tail risk — and does not mechanically track Street consensus. When the two diverge, the divergence itself is informative: it can reflect differences in time horizon, valuation methodology, or the degree to which the current price already discounts the consensus case. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Monte Carlo Simulation Framework →
How does LMT score on Value, Quality, Momentum, Volatility, and Size?
LMT five-factor scores (A.L. Capital Advisory, 1–5 scale): Value 2.5/5 (neutral) — measures current price versus DCF intrinsic range and trailing earnings multiples; Quality 3.0/5 (neutral) — captures profitability metrics including return on equity, net margin (ROE: 67.6%) and net margin (6.4%); Momentum 3.0/5 (neutral) — reflects recent price trajectory and earnings surprise consistency; Volatility 5.0/5 (strong) — inverse measure derived from beta, where lower historical volatility earns a higher score; Size 4.0/5 (above average) — market capitalisation rank (mega-cap $1T+ scores 5/5). Composite: 3.5/5. Factor scores above 4.0 signal a tailwind in that dimension; below 2.0 signals a material headwind. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Black-Litterman Model →
What is LMT's tail risk and CVaR?
The 95th-percentile Conditional Value at Risk (CVaR) for LMT on a one-month horizon is -19.5%. CVaR represents the expected average loss in the worst 5% of monthly outcomes — a more conservative tail risk measure than standard VaR, which only marks the loss threshold. Beta of 0.11 indicates below-market volatility. For reference, a diversified S&P 500 ETF carries a one-month CVaR of roughly -8% to -12% in normal market conditions; individual equity CVaR is higher due to idiosyncratic risk. At the portfolio level, what matters is the marginal CVaR contribution of each holding — not its standalone figure. The A.L. Capital Advisory Portfolio Health Check quantifies each position's marginal tail-risk contribution across your entire holdings. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: CVaR & Tail-Risk Methodology →
What is LMT's intrinsic value and DCF price target?
A.L. Capital Advisory's DCF model produces an intrinsic value range of $543 (bear case) to $857 (bull case) for Lockheed Martin Corporation (LMT). At $525.02, the midpoint margin of safety is +33% (positive = discount to intrinsic mid; negative = premium). The bear-to-bull spread reflects genuine sensitivity to the two dominant DCF inputs: the terminal growth rate and WACC. Terminal value typically accounts for 60-80% of total intrinsic value in most equity DCF models, which is why a range is more analytically sound than a point estimate. The central analytical question is not what the DCF outputs as a single number but which growth trajectory the current market price already discounts. All DCF analysis follows CFA Institute standards and is conducted by Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: DCF Valuation Framework →
What would trigger a rating upgrade or downgrade for LMT?
Upgrade trigger: Upgrade to Strong Buy on evidence of accelerating earnings surprise magnitude combined with improvement in the Value factor score — specifically if the current 25.4x P/E is supported by an upward revision to DCF terminal growth assumptions. Downgrade trigger: Continued earnings misses or deteriorating balance sheet quality reducing the Quality factor score below 2.0/5. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Investment Policy Statement Framework →
Does LMT consistently beat earnings estimates?
LMT has beaten consensus EPS estimates in 6% of tracked quarterly periods — indicating inconsistent delivery. The most recent reported quarter missed consensus by 3.8%. Below-average earnings consistency is a primary headwind to the rating and a key watch item in the quantitative model. Earnings surprise magnitude and direction are incorporated into the Momentum and Quality dimensions of the five-factor scoring model. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: DCF Valuation Framework →
How does LMT contribute to portfolio risk and diversification?
LMT carries a beta of 0.11 (low-volatility / defensive relative to the broad equity market). A beta above 1.0 means the position amplifies market moves in both directions at a typical portfolio weight. Strongest peer co-movement: LHX (0.52), RTX (0.47), NOC (0.45). Holding LMT alongside these names in the same portfolio increases concentration risk. True portfolio risk is a function of the full covariance structure — a single stock's beta does not reveal its marginal contribution to portfolio tail loss. The A.L. Capital Advisory Portfolio Health Check quantifies concentration risk (Herfindahl-Hirschman Index), pairwise correlations, and marginal CVaR contribution across all your holdings. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: Ledoit-Wolf Covariance Framework →
What quantitative methodology does A.L. Capital Advisory use to analyse LMT?
A.L. Capital Advisory analyses Lockheed Martin Corporation (LMT) using a four-component quantitative framework grounded in CFA Institute standards. (1) DCF Valuation: projects free cash flows under bear and bull assumptions, discounts at WACC to produce an intrinsic value range with margin-of-safety calculation. (2) Five-Factor Scoring: each equity is scored 1–5 on Value, Quality, Momentum, Volatility, and Size. (3) CVaR Tail Risk: 95th-percentile Conditional Value at Risk from historical simulation of daily returns on a one-month horizon. (4) Earnings Surprise Analysis: quarterly beat rate and magnitude are incorporated into the Momentum and Quality factor scores. The current Avoid rating for LMT is the output of applying this complete framework to current data. Analysis by Anton Ladnyi, CFA (ex-Goldman Sachs, ex-J.P. Morgan) · A.L. Capital Advisory. Full methodology: DCF Valuation Framework → · CVaR & Tail-Risk Methodology →
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This analysis is produced using a systematic quantitative framework applied to market data and does not constitute investment advice. Prose commentary is AI-assisted and generated from structured quantitative inputs. All data and metrics are as of 2026-06-11 and are point-in-time estimates subject to revision without notice. CVaR figures are based on historical simulation and do not guarantee future outcomes. DCF ranges and upgrade/downgrade triggers are forward-looking statements based on current assumptions and may not materialise. Past performance does not guarantee future results. This analysis does not account for individual circumstances, tax position, or investment objectives — consult a qualified financial advisor before making investment decisions. This content is intended for informational purposes only and does not constitute regulated investment advice under MiFID II or FCA guidelines. This content is not intended for US persons or residents of jurisdictions where its distribution would be contrary to local law or regulation. This service is not directed at residents of Finland, Sweden, Norway, Denmark, Iceland, or Poland. The author may hold long or short positions in securities mentioned in this analysis. Nothing on this page represents a solicitation to buy or sell any security. A.L. Capital Advisory is an independent private advisory practice and is not affiliated with Lockheed Martin Corporation.
CFA Portfolio Advisory — LMT
Discuss this analysis, position sizing, or your full portfolio mandate with Anton Ladnyi, CFA.
