In a year marked by volatility and uncertainty, Lockheed Martin (LMT +0.92%) has been a bright spot in the market thus far. Shares of Lockheed are up over 26% in 2026, far outpacing the broader market indexes.
NYSE: LMT
Key Data Points
With Lockheed's valuation rising, is the stock still a buy?
Lockheed's financials have been somewhat of a mixed bag, but there are several positive signs in the latest quarterly report. The company's backlog is a massive $194 billion, sales grew 6% year over year, and free cash flow exceeded expectations.
The bull case for Lockheed depends on military spending steadily increasing. The Trump administration has proposed a defense budget of up to $1.5 trillion for 2027, a marked increase from the $900 billion appropriated for 2026. This policy shift could generate a substantial number of new contracts for Lockheed.
Image source: Getty Images.
Unfortunately, Lockheed's valuation metrics have risen to the point where the stock is teetering on the edge of overvaluation. The stock's trailing P/E ratio is nearing 30. In the past 12 months, the company's market capitalization has increased from $104 billion to $144 billion.
If you're taking a long-term view, though, the current share price shouldn't scare you away. Lockheed's guidance for 2026 maintains a sales growth rate of 5% and segment operating growth of 25%.
Lockheed's dividend yield is fairly strong at 2.2%. This stock has a lot to offer investors seeking stable growth and income, even though its recent run has made shares more expensive.
