GET DAILY SIGNALSLockheed Martin (LMT) Delivers Strong Q3 2026 Results with Record Backlog Growth
Key Takeaways
- Third quarter 2026 sales rose 11% year over year to $20.7 billion, with growth across all four business segments.
- Diluted earnings per share (EPS, or profit divided by shares outstanding) reached $7.97, up from $6.95 a year earlier and above the roughly $7.52 consensus estimate.
- Backlog, the value of contracted but unfulfilled orders, hit a record $292 billion, up 27% from the prior quarter.
- Management raised full-year 2026 guidance for sales, EPS, and free cash flow for the second consecutive quarter.
- Lockheed Martin increased its dividend for the 24th straight year, though quarterly free cash flow declined from $3.3 billion to $3.0 billion.
Why These Earnings Matter Right Now
Lockheed Martin’s third quarter 2026 report came during a period of unusually strong defense demand. Global security concerns have fueled multi-year orders for missile defense, munitions, and combat aircraft, and I’m watching closely to see whether that demand is converting into sustained revenue and profit growth. After a mixed run of recent quarters, the results offer an important read on execution, margin quality, and cash conversion. Because Lockheed Martin operates on a calendar-year fiscal calendar, the third quarter ended September 27, 2026, and this report covers that three-month period. The print also carries broader significance for the defense sector, serving as a barometer of procurement trends and budget visibility.
Breaking Down the Reported Results
Lockheed Martin (LMT) reported third quarter 2026 sales of $20.71 billion, an 11% increase from $18.6 billion in the prior-year period and modestly ahead of analyst estimates near $20.5 billion. Net earnings climbed 14% to $1.845 billion, translating to diluted EPS of $7.97 compared with $6.95 a year ago, beating the consensus of roughly $7.52. Business segment operating profit rose to $2.23 billion, and consolidated operating margin was 11.8%, in line with the year-ago quarter.
Growth was broad-based. Aeronautics sales increased 13% on higher F-35 production and sustainment volume, while Missiles and Fire Control surged 24% on production ramps for PAC-3 (Patriot Advanced Capability-3), THAAD (Terminal High Altitude Area Defense), GMLRS (Guided Multiple Launch Rocket Systems), and PrSM (Precision Strike Missile). Rotary and Mission Systems and Space posted more modest gains. Cash from operations fell to $3.4 billion from $3.7 billion, and free cash flow (cash remaining after capital spending) declined to $3.0 billion from $3.3 billion, partly due to higher working capital investment.
The company raised its full-year 2026 outlook. Sales are now expected between $80 billion and $82 billion, diluted EPS between $30.35 and $30.75, and free cash flow between $7.8 billion and $8.0 billion, up from a prior $7.0 billion to $7.2 billion range. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
Market Reaction and Investor Sentiment
Investors responded favorably to the report. Lockheed Martin (LMT) shares traded higher in the session following the release, extending a recovery that has seen the stock rally after its two most recent earnings beats. The combination of a top- and bottom-line beat, a record backlog, and a raised outlook reinforced confidence that elevated defense demand is translating into durable financial performance. Sentiment was further supported by the seventh straight year of dividend growth, a signal of management’s confidence in cash generation. The main areas of investor caution centered on cash flow, which declined from the prior-year period, and on the degree to which one-time favorable profit adjustments contributed to the quarter’s margin.
Forward Outlook and Key Factors to Monitor
Looking ahead, the central question is whether Lockheed Martin (LMT) can sustain its momentum and convert its record backlog into consistent revenue and free cash flow. Management has already raised guidance twice, and investors will watch whether the fourth quarter and early 2027 confirm that trajectory.
A key catalyst is the F-35 multi-year agreement, which management says cements a path toward 850 U.S. aircraft over a ten-year span and supports production at roughly 156 aircraft per year. The timing of the next F-35 lot award will be closely monitored, as it could provide additional visibility across nearly every financial metric.
On the munitions side, seven-year agreements for PAC-3 and THAAD offer long-term volume visibility, and the company continues to expand manufacturing capacity and supplier partnerships to meet demand. Investors should watch whether these production ramps hold margins steady while scaling output.
Budget dynamics in Washington remain a factor to track, as timing of new program starts and award flows can affect the pace of revenue recognition. Finally, free cash flow quality will stay in focus, given that the third quarter’s cash generation lagged the prior-year period. Whether cash conversion improves in the coming quarters will be an important test of the sustainability of the company’s raised outlook.
Using AI Tools in My Research Process
In my own analysis of earnings like these, I often rely on Tickeron’s AI Screener to quickly filter for comparable companies and spot technical or fundamental trends across the defense sector. It helps surface relevant data points efficiently when evaluating backlog strength or margin trends, giving me a clearer picture without hours of manual work.
Disclaimer
The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.
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Financial writer and active order flow futures trader with a focus on fundamental analysis, macroeconomic factors, and equity research. I make in-depth blogs on stocks and ETFs, bridging the gap between raw market data and real-world trading decisions.
LMT's MACD Histogram just turned positive
The Moving Average Convergence Divergence (MACD) for LMT turned positive on October 09, 2026. Looking at past instances where LMT's MACD turned positive, the stock continued to rise in 25 of 43 cases over the following month. The odds of a continued upward trend are 58%.
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on October 14, 2026. You may want to consider a long position or call options on LMT as a result. In 40 of 78 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 51%.
LMT moved above its 50-day moving average on October 16, 2026 date and that indicates a change from a downward trend to an upward trend.
Following a +7.51% 3-day Advance, the price is estimated to grow further. Considering data from situations where LMT advanced for three days, in 194 of 337 cases, the price rose further within the following month. The odds of a continued upward trend are 58%.
Bearish Trend Analysis
The RSI Indicator demonstrated that the stock has entered the overbought zone. This may point to a price pull-back soon.
The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 5 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where LMT declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 53%.
LMT broke above its upper Bollinger Band on October 22, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Aroon Indicator for LMT entered a downward trend on October 15, 2026. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
The Tickeron SMR rating for this company is 15 (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is 29 (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 78, placing this stock better than average.
The Tickeron Price Growth Rating for this company is 46 (best 1 - 100 worst), indicating steady price growth. LMT’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of 72 (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: LMT's P/B Ratio (15.528) is slightly higher than the industry average of (4.854). P/E Ratio (21.664) is within average values for comparable stocks, (16.403). Projected Growth (PEG Ratio) (0.978) is also within normal values, averaging (2.564). Dividend Yield (0.023) settles around the average of (0.061) among similar stocks. P/S Ratio (1.616) is also within normal values, averaging (18.330).
The Tickeron PE Growth Rating for this company is 73 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
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General Information
a manufacturer of components and systems for aerospace and defense use
Industry AerospaceDefense
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