Lockheed Martin (NYSE: LMT) stock price pulled back 1.1% during midday trading on Tuesday, March 24, 2026. The closing price of $610.17 was a 1.1% decrease from the previous day’s close of $616.25. While this may appear as volatility to short-term investors, long-term investors perceive it as a structural shift, characterized by record-shattering backlogs in delivery amid shooting demand, high-volume production, and a historic shift in the U.S. defense spending cycle.
The US Department of Defense (Pentagon) has increased the defense spending for 2026 and 2027. The U.S. has proposed a record $961.6 billion defense budget for FY2026 and a $1.5 trillion U.S. defense budget for FY2027. President Donald Trump has signaled a 66% increase in military spending to counter global threats, specifically targeting expansion in airpower and sea power. For a company like Lockheed, which relies heavily on government contracts, this represents a generous expansion.
With the ongoing war in the Middle East, defense manufacturers are sitting on historic backlogs as global demand for weapons, aerospace, and advanced technology surges. Lockheed Martin has secured a contract backlog of $194 billion under the leadership of CEO Jim Taiclet. Even though the US has reported certain cybersecurity and software issues for the already delivered stock, long-term investors will be least affected, as the demand for Foreign Military Sales (FMS) remains intact. Moreover, countries like Greece, Italy, and Denmark are aggressively upgrading to the F-16 Viper and F-35 platforms, ensuring a steady stream of revenue for Lockheed Martin through multi-year procurement deals.
Financial Health of Lockheed Martin: Valuation and Dividends
Lockheed Martin’s market capitalization of approximately $140 billion is a strong determinant of the company’s financial health. As of late March 2026, its trailing twelve months (TTM) P/E ratio is approximately 29.2 to 29.8. This indicates a higher valuation compared to its 5-year average of roughly 20x, thanks to the recent price appreciation. The forward P/E ratio is around 20.3 to 20.9, which suggests potential growth in earnings. A reliable 2.2% annual dividend yield continues to attract income-focused investors, which is supported by a healthy price-to-free-cash-flow ratio. The stock is currently testing its 50-day moving average. A sustained break below $605 could signal a deeper correction toward the 200-day support level near $540.
Macro View of Lockheed Martin
Beyond the existing platforms like F-35, Lockheed Martin is expanding its presence in hypersonic weapons and Integrated Air and Missile Defense (IAMD), with Skunk Works and its Missiles and Fire Control division leading development, while High Mobility Artillery Rocket System (HIMARS) remains a high-demand export. Mako missile, a multi-mission hypersonic missile designed to fit inside the internal weapons bays of F-35A/C and F-22 fighters, is in high demand. Following high-performance metrics in global conflicts, the M142 HIMARS (High Mobility Artillery Rocket System) remains in high demand, with recent orders from countries including Estonia. The company has therefore doubled the production of HIMARS.
While Lockheed is poised to set up an all-domain defense ecosystem in 2026, the risks related to the lack of rare earth supply remain a problem. With the Pentagon tightening sourcing rules to exclude adversarial suppliers, CFO Evan Scott and COO Frank St. John are aggressively sourcing supplies from alternative sources. While this is a perceived drawback, the company is striving to ensure it does not affect production.
LMT: Is It a Hold or Sell?
The larger consensus is to hold LT stocks rather than selling it. The 1.1% dip is perceived to be temporary. Given the ongoing and future plans of the company, holding the stocks would be beneficial. Moreover, the broader geopolitical environment is the most favorable it has been for defense primes in decades.
Selling now would mean exiting a company positioned to capture a significant portion of a $1.5 trillion defense budget proposed by the US government. However, for those looking to buy the dip, waiting for a technical bounce off the $600 support level may offer a more favorable entry point.
