Reasonable Price-to-Earnings Ratio
Attractive Price-to-Sales Ratio
Strong Return on Equity
Healthy Operating and Net Profit Margins
Low Debt Levels
Strong Interest Coverage
📈 Strong Growth Trajectory
💰 Robust Free Cash Flow
🎯 Competitive Positioning
🚀 Promising 2025 Outlook
🔍 Focus on Innovation and Partnerships
High Price-to-Book Ratio
Elevated EV/EBITDA Ratio
Low Gross Profit Margin
Low Current and Cash Ratios
⚠️ Impact of Classified Program Charges
📉 Potential Risks from Defense Budget Changes
Lockheed Martin demonstrates strong business quality through solid financial performance and competitive positioning. However, risks associated with classified programs and potential shifts in defense budgets could impact future growth. The outlook for 2025 remains positive with expected sales growth and a focus on innovation.
Analysis Date: January 28, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$282.63
Current Market Price: $431.03
IV/P Ratio: 0.66x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-53.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for LMT
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (19.11)
P/B ratio ≤ 1.5 (16.10)
Current ratio ≥ 2.0 (1.13x)
Long-term debt < Net current assets (8.08x)
Margin of safety (-53.0%)
LMT does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
LMT's return on equity of 80.98% indicates strong profitability and effective management of shareholder equity.
With operating profit margin at 9.92% and net profit margin at 7.51%, LMT demonstrates effective cost control and profitability.
A gross profit margin of 9.88% suggests that LMT may have high costs relative to its sales, which could impact overall profitability.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
80.98%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
0.95%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
9.88%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
7.51%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
A debt-to-equity ratio of 0.10 indicates that LMT has low leverage, reducing financial risk.
An interest coverage ratio of 6.80 suggests that LMT can comfortably meet its interest obligations, indicating good financial health.
The current ratio of 1.13 and cash ratio of 0.13 indicate potential liquidity concerns, as the company may have limited short-term assets to cover liabilities.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
3.20x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.13x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Lockheed Martin's return to growth strategy has led to a 5% increase in sales year-over-year for 2024, alongside a record backlog of $176 billion. This growth is indicative of strong demand for their products across all business areas, with a book-to-bill ratio greater than 1.
The company generated $5.3 billion in free cash flow in 2024, exceeding 100% of that being returned to shareholders through dividends and share repurchases. This reflects strong financial health and commitment to shareholder value.
Lockheed Martin has a competitive edge due to its extensive experience in defense contracting and its ability to integrate advanced technologies across various domains. They are investing heavily in R&D ($3.3 billion in 2024) to maintain this edge.
The company recorded significant charges ($1.8 billion) related to classified programs which adversely affected segment operating profits. This raises concerns about the management and execution of such high-stakes contracts.
Lockheed Martin expects sales growth of 4% to 5% in 2025 with operating margins returning to 11%. The growth is supported by a strong demand for munitions and integrated air defense systems.
The company is actively pursuing partnerships with leading tech firms (e.g., Nvidia, Microsoft) to enhance its capabilities in AI and advanced technologies, indicating a strong commitment to innovation.
With a new administration, there may be shifts in defense budget priorities that could impact production rates and funding for key projects such as the F-35, potentially leading to revenue volatility.