Security and Aerospace company Lockheed Martin (NYSE: LMT) missed Wall Street’s revenue expectations in Q1 CY2026, with sales flat year on year at $18.02 billion. On the other hand, the company’s outlook for the full year was close to analysts’ estimates with revenue guided to $78.75 billion at the midpoint. Its GAAP profit of $6.44 per share was 3.7% below analysts’ consensus estimates.

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"Lockheed Martin's superior capabilities in delivering advanced defense technology and systems and in space exploration have been proven again and again in 2026. Our Orion spacecraft safely carried the crew farther from Earth than ever before during NASA's historic Artemis II mission, concluding with a precisely executed re-entry and splashdown. Our superior fifth generation fighter jets, the F-35 and F-22, continue to operate with great effectiveness in contested and difficult missions. Additionally, our layered missile defense architecture, including phased array radars, Aegis integrated command and control system, and the THAAD and advanced Patriot Missile interceptors, protected both military assets and civilians," said Lockheed Martin Chairman, President and CEO Jim Taiclet.

Company Overview

Headquartered in Maryland, Famous for the F-35 aircraft, Lockheed Martin (NYSE: LMT) specializes in defense, space, homeland security, and information technology products.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Unfortunately, Lockheed Martin’s 2.6% annualized revenue growth over the last five years was sluggish. This was below our standards and is a rough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Lockheed Martin’s annualized revenue growth of 3.9% over the last two years is above its five-year trend, which is encouraging.

We can better understand the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Lockheed Martin’s backlog reached $186.4 billion in the latest quarter and averaged 7.9% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for Lockheed Martin’s products and services but raises concerns about capacity constraints.

This quarter, Lockheed Martin’s $18.02 billion of revenue was flat year on year, falling short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 7.2% over the next 12 months. While this projection indicates its newer products and services will catalyze better top-line performance, it is still below average for the sector.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Lockheed Martin has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 11.7%.

Analyzing the trend in its profitability, Lockheed Martin’s operating margin decreased by 3.6 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Lockheed Martin generated an operating margin profit margin of 11.4%, down 1.8 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Lockheed Martin, its EPS declined by 3.7% annually over the last five years while its revenue grew by 2.6%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

We can take a deeper look into Lockheed Martin’s earnings to better understand the drivers of its performance. As we mentioned earlier, Lockheed Martin’s operating margin declined by 3.6 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Lockheed Martin, its two-year annual EPS declines of 13.1% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q1, Lockheed Martin reported EPS of $6.44, down from $7.28 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Lockheed Martin’s full-year EPS of $20.65 to grow 47.5%.

Key Takeaways from Lockheed Martin’s Q1 Results

We struggled to find many positives in these results. Its adjusted operating income missed and its EPS fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 2.9% to $539.49 immediately after reporting.

Lockheed Martin may have had a tough quarter, but does that actually create an opportunity to invest right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).