Underweight: Trim 30-35% into $540-$555 resistance; preserve core with $480 hard stop
This is a TIMING call, not a QUALITY call. The structural thesis remains intact ($173B backlog, sole-source PAC-3/F-35/THAAD/Trident franchises, 1.75x FCF dividend coverage, 13-year dividend growth streak, beta 0.10). Re-engagement triggers are pre-committed (two-of-three confirmation framework). Trim magnitude (30-35%) is calibrated to realized volatility bands per the 9/9 reflection rather than momentum acceleration signals (MACD at −9.89). Underweight rating reflects confirmed distribution (nine sessions below VWAP at $545, stacked MA resistance at $539/$551/$553) that rules out Buy/Hold, while structural floor rules out full Sell. Trader's SELL label and Aggressive Analyst's 50% trim both overshoot — the textbook Underweight definition is a duration-sized trim with preserved core, not full exit.
| Position | Action |
|---|---|
| Price in $540-$555 resistance zone | Trim 30-35% of LMT position over 5-10 sessions |
| Preserved core position | Maintain 65-70% core for structural exposure, dividend capture (2.6%), and Q3 earnings optionality |
| Tactical short layer entry | Entry $553, stop $590, target $510 |
| Price hasn't reached $545 within 15 trading days | Trim at market regardless (time stop per Neutral Analyst) |
| Proceeds deployment | Cash or short-duration Treasuries (~4% yield); NO single-name small-cap defense rotation; ITA/XAR acceptable if sector exposure desired |
The 12.3% drawdown on Lockheed Martin represents a mispriced oversold entry in a defensive mega-cap with accelerating earnings, a confirmed missile demand super-cycle, and historically cheap valuation — not a structural breakdown.
| Indicator | Value | Signal |
|---|---|---|
| close | 530.12 | neutral |
| 10_ema | 539.51 | bearish |
| 50_sma | 553.40 | bearish |
| 200_sma | 551.06 | bearish |
| rsi | 39.59 | bearish |
| macd | -9.89 | bearish |
| macd_signal | -4.80 | bearish |
| macd_histogram | -5.09 | bearish |
| boll_mid | 559.40 | bearish |
| boll_lower_band | 508.15 | neutral |
| atr | 13.67 | neutral |
This report is AI-generated for informational and educational purposes only and is not investment advice or a recommendation to buy or sell any security. Full disclaimer.
When: MACD histogram contracting for 2 sessions + price reclaim $551 on volume
Then: Re-engage 50% of trimmed size
Q2 2026 was LMT's best quarter in two years, with H1 net income nearly doubling year-over-year
EV: +5% to +23% (base case $556, bull case $654) · concedes: Operating margin compressed from 12.7% in FY22 to 10.3% in FY25; Q3 earnings execution risk is real; Covenant disruptor is a legitimate 2028+ threat to commodity munitions (though not to LMT's core franchises); Short-term technical pattern shows stacked bearish MA with lower highs and lower lows
LMT is in a confirmed downtrend with deteriorating momentum, structural margin pressure (240bps compression from FY22 peak), and a valuation that is not cheap at 18.9-19.6x realistic forward EPS of $27-28. The bear recommends avoiding or shorting LMT with targets at $510/$480.
EV: -$50 (-10%) to $0 (bear to base case) · concedes: Q2 2026 EPS of $7.94 was an actual strong quarter; The cash flow machine is real; Dividend provides some return for position holders; 200 SMA at $551 is currently holding as support; Missile segment growth thesis by 2030 is directionally correct; LMT is not a bankrupt or failing company
→ vs conservative: Quality compounds over years but doesn't immunize from tape risk over weeks/months; LMT could be down another 10-15% while digesting 23% drawdown from August highs
→ vs neutral: Waiting for 'confirmation' on a stock making lower highs and lower lows for 5 weeks means selling after the next leg down has already happened; act on what the tape is telling you
→ vs conservative: Bull thesis hangs entirely on Missiles and Fire Control segment - disruptor narrative directly attacks the high-volume, lower-margin munitions tail where the volume growth story lives
| vwma | 545.86 | bearish |
Support: 524.09 · 508.15 · 480 · 490 | Resistance: 530.12 · 539.51 · 551.06 · 559.4 · 603 · 605
LMT is in a confirmed short-term downtrend, having declined 12.3% from $604.94 (August 14) to $530.12, with price trading below all key moving averages. Technical indicators are strongly bearish with MACD at −9.89, RSI at 39.59, and price sitting just above the Bollinger lower band at $508.15. The ATR of $13.67 indicates elevated volatility (~2.6% of price), warranting widened stops of at least 2× ATR ($27) for risk management.
Market Cap
$122.35B
P/E (TTM)
19.55x
Forward P/E
16.20x
PEG Ratio
1.0
P/B
13.91x
Dividend Yield
2.63%
Beta
0.104
52-Week High
$692.00
52-Week Low
$437.25
50-DMA
$555.95
200-DMA
$557.44
Implied Current Price
~$532
TTM Revenue
$77.01B
TTM EBITDA
$9.68B
TTM Net Income
$6.29B
TTM FCF
$5.56B
Gross Margin (TTM)
11.8%
Operating Margin (TTM)
11.96%
Net Margin (TTM)
8.16%
ROA
8.64%
ROE (reported)
89.17%
Total Assets
$62.45B
Stockholders' Equity
$8.77B
Net Debt
$16.75B
Net Debt/EBITDA
~1.86x
Current Ratio
1.19
Net Tangible Assets
-$4.32B
Annual Dividends (FY25)
$3.13B
Annual Buybacks (FY25)
$3.00B
Total Capital Returned FY25
$6.13B
Q2 2026 Revenue
$20.06B
Q2 2026 Net Income
$1.84B
Q2 2026 Diluted EPS
$7.94
Q2 2026 OCF
$3.24B
Q2 2026 FCF
$2.92B
FY2025 Revenue
$75.05B
FY2025 Net Income
$5.02B
FY2025 Diluted EPS
$21.49
FY2025 Operating Margin
10.3%
FY2025 Gross Margin
10.2%
Deferred Revenue (Current)
$12.15B
Receivables
$19.39B
Pension/OPEB Liabilities
$3.93B
Long-Term Debt
$20.54B
Cash & Equivalents
$3.79B
Base Case Fair Value
$556
Bull Case Fair Value
$654
Bear Case Fair Value
$380
Strengths
Concerns
Lockheed Martin is the world's largest defense prime contractor with deep U.S. DoD and allied military sales exposure across four segments: Aeronautics (F-35), Missiles & Fire Control (PAC-3, THAAD, JASSM), Rotary & Mission Systems (Sikorsky), and Space (Trident, satellites). The company delivered Q2 2026 EPS of $7.94—its best quarterly performance in two years—signaling operational momentum after Q2 2025's anomalous weakness. With TTM revenue of $77.01B, TTM FCF of $5.56B, and a backlog providing multi-year revenue visibility, LMT generates robust cash that fully funds ~$6.1B in annual capital returns (dividends + buybacks). Trading at 16.2x forward P/E with a 2.63% dividend yield, the stock is fairly valued but offers upside if margins recover toward 12%+. The primary risks are fixed-price contract cost overruns, government budget uncertainty (~73% revenue from U.S. DoD), and structural margin compression from 12.7% (FY22) to 10.3% (FY25). With near-zero market beta (0.10), LMT serves as a defensive portfolio anchor rather than a tactical trading vehicle.