Choosing between the world's largest defense contractors involves weighing steady government contracts against commercial aerospace recovery. You must decide whether Lockheed Martin (LMT -1.38%) or RTX (RTX -1.12%) offers better value today.
LMT & RTX: Performance Comparison
Key Financial Metrics
Lockheed Martin remains a premier choice for pure-play defense exposure, while RTX provides a more diversified mix of military and commercial aerospace technologies. Both companies are navigating a complex landscape of shifting geopolitical priorities and supply chain hurdles in 2026.
The case for Lockheed Martin
Lockheed Martin designs defense technologies across aeronautics, missiles, and space. It serves as a massive player among defense stocks, with a portfolio serving the U.S. Department of Defense and other federal agencies. The U.S. government accounted for nearly 72% of 2025 sales, and customer concentration like this adds a layer of risk to the business.
In FY 2025, revenue reached approximately $75.1 billion, representing growth of 5.7% over the previous year. This resulted in net income of just over $5 billion. The F-35 program remains the primary revenue driver, contributing nearly 27% of total sales and supporting international partnerships.
As of its December 2025 balance sheet, the debt-to-equity ratio was roughly 3.2x. This ratio measures total debt relative to shareholders’ equity, indicating how much a company relies on borrowed money. Free cash flow reached $6.9 billion in the year. The current ratio, which compares assets to upcoming bills, is nearly 2.8x.
The case for RTX Corp.
RTX operates through three main segments: Collins Aerospace, Pratt & Whitney, and Raytheon. It serves both commercial and government aviation markets, providing parts for manufacturers like Airbus and Boeing Co (BA -0.42%). This diversification makes it a unique player because it is less reliant on any single government program compared to its peers.
For FY 2025, revenue reached $88.6 billion, representing approximately 9.8% growth over the prior year. This helped the company generate net income of roughly $6.7 billion. International customers accounted for close to 47% of 2025 net sales, demonstrating global reach beyond domestic borders.
The December 2025 balance sheet showed a debt-to-equity ratio of approximately 0.6x, about the same ratio as today, indicating a balance between short-term assets and liabilities. Free cash flow for 2025 was $7.94 billion, representing the cash a company generates after covering its operating costs and capital expenditures.
Risk profile comparison
Lockheed Martin is highly sensitive to U.S. government budget priorities, which can shift with political cycles. The company is also managing litigation risks, including a $4.25 billion lawsuit by SDR Group over hybrid airship business models. Additionally, the F-35 program carries ongoing risks related to cost overruns and technical performance schedules.
RTX is navigating global supply chain constraints and labor shortages, which are increasing costs and hindering production. The company is also subject to regulatory monitoring under agreements with the DOJ and SEC regarding pricing and anti-bribery compliance. Furthermore, the powder metal matter, a manufacturing defect, requires accelerated inspections for specific engine models through 2026, which impacts its Pratt & Whitney segment.
Valuation comparison
Lockheed Martin currently trades at a significantly lower earnings multiple than RTX, though it offers a slightly lower net margin.
| Metric | Lockheed Martin | RTX | Sector Benchmark |
|---|---|---|---|
| Forward P/E | 17x | 26.7x | 31.6x |
| P/S ratio | 1.6x | 2.8x |
Sector benchmark uses the SPDR XLI sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?
Lockheed Martin Corp is a core company in the middle of one of the biggest priorities in the U.S.: aerospace and defense. In particular, the F-35 fighter program remains a pillar of Lockheed’s business, with the Defense Department planning to continue to buy the jet into the 2040s. Having more than a quarter of revenue essentially guaranteed for 15 years or more is unheard of and quite appealing to a long-term investor.
RTX Corp benefits, too, from the U.S. focus on its military, which should provide a steady stream of business for the foreseeable future. However, RTX is still much more an amalgamation of parts than Lockheed. RTX consists of various vendors, such as engine maker Pratt & Whitney and Collins Aerospace. RTX was formed through the merger of Raytheon and United Technologies in 2020, so while the company has been executing well, there is still some work to be done in integrating the massive businesses.
That said, RTX is expected to be the fastest-growing of the two businesses this year, with revenue advancing about 6% to $90.1 billion, while Lockheed Martin’s sales are anticipated to grow about 5% to $79.1 billion.
Under the theory of buy good companies at good prices, Lockheed Martin gets the nod here. LMT is cheaper by the forward price-to-earnings and the forward price-to-sales ratios.
