TLDR
- Lockheed Martin fell 11.67% over the past week after missing Q1 EPS and revenue estimates
- Q1 EPS came in at $6.44 vs. the $6.74 consensus; revenue was $18.02B vs. $18.38B expected
- Free cash flow turned negative at -$291 million in the quarter
- Multiple analysts cut price targets; consensus remains Hold with an average target of ~$635
- Management reaffirmed FY2026 guidance of $29.35–$30.25 EPS despite the quarterly miss
Lockheed Martin had a rough week on Wall Street. The defense giant’s stock dropped 11.67% after its Q1 2026 earnings report disappointed investors on nearly every front.
Lockheed Martin Corporation, LMT
The company posted EPS of $6.44, missing the Street’s consensus of $6.74 and well below the $7.28 it earned in Q1 2025. Revenue came in at $18.02 billion, roughly flat year-over-year and short of the $18.38 billion analysts had expected.
One factor behind the revenue softness: Q1 2026 had one fewer working week than the same period last year. That alone clipped several hundred million dollars off the top line.
Free cash flow turned negative, coming in at -$291 million. The company cited margin compression, working capital swings, and fixed-price contract pressure as contributing factors.
Bookings were also soft, coming in at a book-to-bill ratio of just 0.6x for the quarter. Timing issues were blamed, but it added to the cautious mood around the print.
Analysts Cut Targets, Hold Ratings Stay
The earnings miss triggered a wave of price target reductions. RBC Capital cut its target from $650 to $575 while keeping a Sector Perform rating, pointing to “incremental negative estimated costs at completion” and mixed near-term growth prospects.
BNP Paribas Exane, Morgan Stanley, Deutsche Bank, and Susquehanna also trimmed their targets. The consensus now sits at Hold, with an average price target of around $635 — implying more than 25% upside from current levels around $510.
TD Cowen and TipRanks–xAI also maintained Hold ratings, with targets in the $575–$600 range. Despite the potential upside implied by those targets, the steady stream of neutral ratings kept pressure on the stock.
LMT opened Friday at $513.21. The stock is now trading well below its 50-day moving average of $628 but above its 200-day moving average of $553.
Long-Term Picture Holds Steady
Away from the quarterly noise, Lockheed’s order book and program pipeline remain intact. The Pentagon is planning to increase F-35 purchases through 2030–31, which would support future production volumes.
Peru agreed to buy 12 F-16 Block 70 jets in a direct commercial sale. Lockheed also picked up roles in U.S. missile defense programs, including the “Golden Dome” awards, and received DOD contracts to replenish Patriot inventories.
Management reaffirmed its FY2026 guidance, projecting EPS of $29.35–$30.25. The sell-side consensus for the full year sits at approximately $29.97.
The company also continues to pay a $3.45 quarterly dividend, equating to a 2.7% yield. The payout ratio stands at around 66.8%.
Vanguard Group trimmed its position by 17,369 shares in Q4 but still holds 21.27 million shares, representing roughly 9.19% of the company and valued at approximately $10.29 billion.
Institutional investors overall own 74.19% of the stock. LMT’s 52-week range runs from $410.11 to $692.00, with the stock currently sitting near the lower half of that range.
RBC Capital’s revised $575 price target and Sector Perform rating remain the most recent analyst action on the stock.
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