Lockheed Martin Corp (NYSE:LMT) reported fourth-quarter financial results that presented a complex picture for investors, leading to a mixed market reaction in pre-market trading. The defense giant surpassed Wall Street's top and bottom-line expectations but faced scrutiny over its profitability in a period of surging sales.
Quarterly Results Versus Estimates
The company's performance for the quarter ending December 2025 was characterized by strong revenue growth that exceeded forecasts, while earnings per share came in just ahead of consensus.
- Reported Revenue: $20.32 billion
- Estimated Revenue: $20.05 billion
- Reported Non-GAAP EPS: $5.80
- Estimated Non-GAAP EPS: $5.76
This performance marks a significant year-over-year improvement. Sales rose from $18.6 billion in Q4 2024, and net earnings of $1.3 billion ($5.80 per share) rebounded sharply from $527 million ($2.22 per share) in the prior-year period, which was heavily impacted by $1.7 billion in pre-tax losses on classified programs.
Market Reaction and Price Action
The immediate market response has been cautiously positive. Following the earnings release, LMT shares are trading approximately 5.5% higher in pre-market activity. This upward move suggests investors are focusing on the revenue beat and the substantial year-over-year recovery in profitability. The positive sentiment is further supported by the stock's recent momentum, having gained over 22% in the past month, potentially positioning it for a breakout from a prolonged consolidation period as noted in recent financial news.
However, some analysis points to the earnings figure missing other, potentially more optimistic, analyst estimates despite record F-35 deliveries. This nuance may explain why the pre-market gain, while solid, is not more pronounced, as the market digests the balance between robust sales growth and profit margins.
Key Highlights from the Earnings Release
Beyond the headline numbers, the earnings report highlighted several critical financial strengths:
- Cash Flow Generation: The company demonstrated dramatically improved cash generation. Cash from operations surged to $3.2 billion in Q4 2025, up from $1.0 billion a year ago.
- Free Cash Flow: After making a significant pension contribution of $860 million, free cash flow was a robust $2.8 billion, compared to $441 million in the prior-year quarter.
- Strategic Contract: Concurrent with the earnings, Lockheed Martin announced a major framework agreement with the U.S. Department of War to quadruple production capacity for its Terminal High Altitude Area Defense (THAAD) interceptors. This agreement underscores sustained demand for missile defense systems and provides visibility into future production and sales growth.
Looking Ahead: Estimates for 2026
While the press release did not provide formal forward-looking guidance, current analyst estimates establish benchmarks for the coming year. For the full fiscal year 2026, analysts project sales of approximately $78.61 billion and earnings per share around $29.57. For the immediate next quarter (Q1 2026), the consensus estimates are for sales of $18.89 billion and EPS of $7.03. Investors will likely monitor the company's progress against these estimates, particularly its ability to convert its record order backlog and new agreements like the THAAD deal into sustained revenue and profit growth.
For a detailed breakdown of historical earnings and future analyst estimates for Lockheed Martin, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an endorsement of any security or investment strategy. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
