Like a cruise missile veering off course, shares of aerospace and defense giant Lockheed Martin (LMT -2.15%) have fizzled rather than soared in 2025. Muted profit guidance and market concerns toward the Trump administration’s defense spending policies have emerged as recent headwinds for the stock, which is currently down about 25% from its 52-week high.
Yet, investors might be making a mistake losing a lock on this industry leader, supported by solid fundamentals and plenty of firepower to right its course. Is now the time to buy the dip on Lockheed Martin stock?
Mixed trends into 2025
For over a century, Lockheed Martin has been at the forefront of groundbreaking innovations that have revolutionized high-performance aircraft design, tactical military systems, and even space technologies.
Several high-profile programs, including the flagship F-35 fighter jet, the Joint Air-to-Surface Standoff Missile (JASSM), the Patriot PAC-3 missile system, and the Black Hawk helicopter, are crucial to the national security objectives of the U.S. and allied forces worldwide. This profile is a big part of what makes Lockheed Martin an excellent blue chip stock and a potential investment.
Nevertheless, the company is showing some mixed signals heading into 2025. Although it concluded a strong 2024 in terms of sales, with its order backlog reaching a record $176 billion, both revenue and earnings for the last reported fourth quarter fell short of Wall Street estimates.
The company’s core aeronautics segment is benefiting from the resumption of F-35 jet deliveries for the U.S. Department of Defense, which had been on hold pending necessary hardware and software updates, although the ramp-up has been slower than initially expected. Lockheed now anticipates delays in installing a refresh to cockpit visual displays and onboard computers under the Technology Refresh 3 program will linger into 2026 amid supply chain bottlenecks.
Image source: Getty Images.
With the uneven results from the other core segments, the 2024 adjusted earnings per share (EPS) of $27.99 increased by just 1.6% compared to 2023. For 2025, Lockheed is aiming for revenue growth between 3.9% and 5.4%. However, the guidance for 2025 adjusted EPS of $27 to $27.30 represents a disappointing 3% decline from 2024 at the midpoint.
All this unfolds as the Trump administration’s recent move to freeze U.S. military aid for Ukraine has cast a shadow of uncertainty over the broader defense sector. While Lockheed Martin’s immediate impact is likely minimal, as orders meant for Ukraine that have not been delivered will likely be used to replenish Pentagon inventory, questions arise about how future contracts and its backlog will evolve.
| Metric | 2024 | 2025 Estimate |
|---|---|---|
| Revenue (in billions) | $71.0 | $73.8 to $74.8 |
| Revenue growth (YOY) | 5% | 3.9% to 5.4% |
| Adjusted earnings per share (EPS) | $27.99 | $27.00 to $27.30 |
| Adjusted EPS growth (YOY) | 1.6% | (3.5%) to (2.5%) |
Data source: Lockheed Martin. YOY=year over year.
A defense tech leader at an attractive valuation
There’s an understanding that 2025 might be a transitional year for Lockheed, setting the stage for a stronger rebound in earnings for 2026 and beyond. The company remains highly profitable, generating significant free cash flow with a long runway in strategically important programs.
What I appreciate about the stock is the company’s ongoing efforts at diversification through its “21st Century Security” initiative — aiming to accelerate the integration of more advanced technologies across its product portfolio. Efforts including investments in advanced technologies like artificial intelligence and its cybersecurity offerings position the company to generate more sustainable growth over time.
By this measure, the silver lining of the stock price sell-off is that it has brought down its valuation to a more compelling level. Shares of Lockheed Martin are currently trading at a forward price-to-earnings (P/E) ratio of 17 times its consensus 2025 EPS, a level slightly below the company’s 10-year average for the earnings multiple closer to 18. With the company steering in a more high-tech direction, there’s an argument that the stock deserves a larger valuation premium.
LMT PE Ratio (Forward) data by YCharts
An opportunity to buy the dip
I’m bullish on Lockheed Martin stock and have a sense that its recent weakness is temporary and the company is well-positioned to get back on track and reward shareholders. Investors who are confident in the company’s long-term potential, and willing to ride out the near-term market turbulence, have a great opportunity to pick up shares in this industry leader for a diversified portfolio.
Dan Victor has no position in any of the stocks mentioned. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.
