Shares of Lockheed Martin (NYSE:LMT) caught a 3.6% updraft on Tuesday, following a superb Q2 earnings report. A just reward for strong performance? Certainly. But even so, it's only a single quarter's news, and a single day's gains (the stock began falling again -- along with everybody but, it seemed -- on Wednesday).

Here at the Fool, we're much too busy investing long-term to lock our sights on a mere three-month time span. With that focus in mind, let's check out how well Lockheed has performed so far this year, and how far it's progressed along its 2007 flight plan.

As I mentioned in Monday's Foolish Forecast, Lockheed was at last report predicting:

  • $6.20 to $6.35 in per share profits this year
  • $40.4 billion to $41.4 billion in revenue
  • more than $4 billion in cash flow from operations

Over the past six months, the firm has already racked up $3.42 per share in profits, $19.9 billion in sales, and $2.9 billion in cash from ops. Yes, you read that right. Less than halfway towards meeting its sales target, Lockheed has already extracted more than half of its desired profits from those revenues, and is nearly three-quarters of the way toward hitting its cash-flow target. Impressive.

Or rather, it would have been, if management hadn't gone and moved the goalposts in response to the first half's good news. Since it's doing so well already, Lockheed increased its own guidance for this fiscal year. It now aims to:

  • earn $6.65 to $6.80 per share
  • on $41 billion to $41.8 billion in sales, and
  • generate 5% more cash than previously thought -- $4.2 billion.

Moreover, if Lockheed maintains its current rate of capital expenditures ($254 million year-to-date), it looks on track to generate roughly $3.7 billion in profits this year. That would be considerably more than the $3 billion in profits it seems likely to report under GAAP.

Just for kicks, let's see what that free cash flow might reveal to us about Lockheed's share price. At present, the shares look to be priced at a bit of a premium -- 17 times trailing GAAP earnings, versus projected profits growth of less than 12%. For comparison, that's about the same valuation Northrop Grumman (NYSE:NOC) gets, considerably cheaper than Boeing (NYSE:BA), and a bit pricier than Raytheon (NYSE:RTN). However, when you value the stock based on its free cash flow, the situation changes. The firm's 11.6 multiple to trailing FCF almost exactly matches its projected growth rate.

My take on this: The shares seem fairly valued today, and may even prove to be a bargain if Lockheed keeps showing the kind of improvement we saw yesterday.

Read up on recent Lockheed news in:

Fool contributor Rich Smith does not own shares of any company named above.