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    Lockheed Martin (LMT) Stock Still Trades Below Fair Value As Its 68% Five Year Run Continues

    Simply Wall St·09/30/2026 20:26:56
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    Lockheed Martin has delivered a 68.4% gain over the past five years, yet the sharper moves this year and a busy news flow around new fighter jets and missile programs put the focus squarely on one issue: whether today’s share price lines up with the cash the business is expected to generate. For anyone looking at the stock now, the key is not just what contracts are being signed but what those deals might mean for the durability and timing of future cash flows.

    • That 68.4% return over five years means long term holders now have a lot of embedded gains, which raises the stakes on whether the underlying cash flows can support the current valuation.
    • The planned US sale of up to 48 F 35 jets to Saudi Arabia and fresh missile production agreements may support expectations for sizeable, long duration defense programs that can influence how much cash Lockheed Martin is expected to convert from its backlog.
    • If you'd rather focus on earnings, this one's for you. See what Lockheed Martin's 18.8x P/E says about the price.

    The issue now is whether the cash flows implied by Lockheed Martin’s current and future programs are strong enough and reliable enough to justify where the stock trades today.

    If you want a broader starting point to compare Lockheed Martin with other potential ideas, a focused screen of 32 high quality undervalued stocks.

    Is Lockheed Martin Still Cheap on Cash Flow?

    The Discounted Cash Flow model looks at what Lockheed Martin might return to shareholders based on future free cash generation. In this view, the business is treated as a mature cash engine rather than a high growth story, with the latest twelve month free cash flow at about $8.6b and the projections assuming steady, growing cash flows rather than sharp swings.

    Those cash flow estimates extend well into the 2030s and still point to value that sits substantially above the current share price of $512.21. The planned US sale of up to 48 F 35 jets to Saudi Arabia, along with missile production contracts, helps explain why the model assumes that Lockheed Martin can keep converting a sizeable backlog into recurring cash. Find out what Lockheed Martin could be worth using our Discounted Cash Flow (DCF) estimate.

    The Lockheed Martin Narrative: What Would Justify Today's Price?

    Simply Wall St Narratives pick up where the Lockheed Martin valuation question leaves off and spell out which assumptions about future growth, profitability and earnings power would need to hold for the stock to be worth materially more or less than today’s price on the Community page. Each one treats Lockheed Martin's fair value as a thesis about how the business might develop over time so you can see whether the story is tracking or drifting.

    One of the top community narratives on Lockheed Martin: 20% undervalued

    "A record backlog of about US$230b supported by a book to bill ratio of 3.2 to 1 and large multiyear awards such as the seven year US$35b THAAD contract and major radar and space orders points to a multi year period where new work converts into sales, earnings and free cash flow that are not yet fully reflected in reported results…"

    Discover why this Narrative puts Lockheed Martin at 20% undervalued.

    The unanswered piece of the Lockheed Martin puzzle

    Valuation tells you what the cash flows might be worth, but you still need to ask who is steering Lockheed Martin and how their rewards line up with your interests. See who runs Lockheed Martin and how they are paid.

    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.