LMT

We rate LOCKHEED MARTIN CORP (LMT) as a Buy with a composite score of 73.5/100 at a current price of $666.56. The stock scores above average across the majority of our six quantitative factors and ranks #27 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in stability (93th percentile) and value (91th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (37th percentile) and momentum (73th percentile) tempers our overall conviction. We assign a Narrow Moat rating (60/100), Medium uncertainty, and Standard capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

LOCKHEED MARTIN CORP holds an above-average position (#14 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 73.5/100 places it at rank #27 in our full 7,333-stock universe. With a $111.9B market capitalization, LOCKHEED MARTIN CORP operates at meaningful scale within the Manufacturing sector, providing competitive advantages in distribution, procurement, and customer reach.

The outlook is moderately positive, with revenue expanding at 3% and favorable momentum (73th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 10% (-32.2pp vs sector) narrow to operating margins of 11% (+9.2pp vs sector) and net margins of 7.4%, yielding a gross-to-net conversion rate of 72%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $666.56, LOCKHEED MARTIN CORP appears undervalued relative to its fundamentals. Our value factor score of 91/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 28.6x (a 29% premium to the sector median of 22.3x), EV/EBITDA of 23.0x (at a premium), P/B of 22.5x, P/S of 2.1x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Medium uncertainty rating to LOCKHEED MARTIN CORP. The stock presents a balanced risk profile: significant leverage (323% debt-to-equity) and low beta of 0.25 — while defensive, this may indicate limited upside participation in bull markets. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (323% debt-to-equity); low beta of 0.25 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 93th percentile and quality factor at the 80th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (93th percentile) suggests predictable business dynamics; large-cap scale ($111.9B) provides resilience; a 2.76% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate LOCKHEED MARTIN CORP's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 78.8%, and the balance sheet is managed within acceptable parameters (D/E: 323%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; LOCKHEED MARTIN CORP falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 2.76% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, LOCKHEED MARTIN CORP receives a Buy rating with a composite score of 73.5/100 (rank #27 of 7,333). Our quantitative framework assigns a Narrow Moat (60/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 75/100.

Our analysis supports a constructive view on LOCKHEED MARTIN CORP. The combination of identifiable competitive advantages, medium uncertainty, and standard capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.