Lockheed Martin shares jump 9% on Q3 beat, record backlog

Lockheed Martin shares jumped 9% on Oct. 22 after the defense contractor reported third-quarter results that beat Wall Street expectations and a record order backlog. Lockheed Martin posted earnings per share of $7.97, above the $7.52 consensus, on revenue of $20.7 billion. The Bethesda-based company benefited from rising global military demand. The results showed investor confidence in the company's ability to navigate elevated geopolitical risks and sustain demand.

For the quarter ended Sept. 27, Lockheed Martin reported sales of $20.711 billion, up from $18.609 billion a year earlier. Revenue grew about 11% year over year on higher volume across all four business segments. Net earnings rose to $1.845 billion, or $7.97 per diluted share, from $1.619 billion, or $6.95 per share, in the third quarter of 2025. The company's Q3 earnings beat the revenue consensus of $20.5 billion as well.

Lockheed Martin backlog hits $292 billion

Lockheed Martin ended the quarter with a $292 billion backlog, up 27% from the second quarter and a company record. The $292 billion backlog was driven by a $52.5 billion PAC-3 contract for missile interceptors, the single largest contributor to backlog growth. The PAC-3 contract reflects a seven-year multiyear award to produce interceptors.

The defense contractor also announced a new 10-year F-35 agreement with the U.S. Department of Defense on Oct. 22, covering production and maintenance of 850 aircraft for U.S. forces. The F-35 agreement targets a sustained production rate of 156 aircraft per year and gives Lockheed Martin long-term revenue visibility. The framework also covers spare parts, modification kits and operational support, plus international customer orders. The F-35 program accounts for an estimated 25% of Lockheed's total revenue, according to Barron's. The company will self-fund initiatives supporting the program worth at least $7 billion, according to a U.S. Department of War statement cited by Reuters. Reuters noted the agreement does not constitute a purchase order, with the final contract award contingent on government requirements.

"We delivered $3 billion of free cash flow in the quarter, and increased our backlog to a record $292 billion, allowing us to raise our dividend for the 24th year in a row," said Jim Taiclet, chairman, president and chief executive. The company raised its quarterly dividend by $0.15 to $3.60 a share.

Lockheed Martin raises 2026 guidance

Lockheed Martin raised its full-year 2026 guidance, projecting revenue of $80 billion to $82 billion, up from $79.75 billion to $81.75 billion. The company also lifted earnings guidance to $30.35 to $30.75 per share and free cash flow guidance to $7.8 billion to $8.0 billion. It was the second straight quarter the company raised its outlook. "The sustained financial momentum across our portfolio gives us confidence to increase our outlook for sales, earnings per share and free cash flow," Taiclet said. RBC Capital Markets called the guidance increase achievable, while Bernstein Research described the cash flow improvement as substantial.

Segment results were strong across the business. Missiles and Fire Control revenue grew 24.2% to $4.5 billion on production ramps for PAC-3, THAAD, GMLRS and PrSM programs, and Aeronautics revenue rose 13.2% to $8.2 billion on higher F-35 production volume. Rotary and Mission Systems sales reached $4.5 billion, up 3%, while Space sales grew 4% to $3.5 billion. Jefferies analyst Sheila Kahyaoglu called the quarter a "beat," driven by the missile business, while Vertical Research Partners analyst Rob Stallard noted the backlog surge. The defense contractor's Q3 earnings showed broad demand as geopolitical tensions keep military spending elevated. Its fiscal year ends Dec. 31.