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Lockheed Martin (LMT) beat third-quarter 2026 estimates with $7.97 EPS on $20.7B revenue and raised its full-year outlook. A record $292B backlog, built on missile demand, supports the guidance.
- Q3 EPS of $7.97 on $20.7B in sales, up 11% from a year earlier, beat consensus.
- Backlog hit a record $292.0B, up 27% since Q2, including a $52.5B PAC-3 award.
- 2026 free cash flow guidance rose to $7.8B-$8.0B from $7.0B-$7.2B.
Lead
Lockheed Martin (NYSE: LMT) shares rose about 5% on Thursday, October 22, 2026, to roughly $578 in early trading, after the company reported third-quarter results that beat Wall Street forecasts. Diluted earnings per share rose 14.6% to $7.97 from $6.95 a year earlier, against a consensus of roughly $7.4-$7.5. Sales increased 11% to $20.7B, ahead of the roughly $20.5B expected. Net earnings rose 14% to $1.8B.The company also lifted its 2026 outlook for the second straight quarter. Missile production led the gains.
What Did Lockheed Martin Report for the Third Quarter?
Lockheed Martin reported sales of $20.7B and net earnings of $1.8B, with every business segment growing. Cash from operations was $3.4B and free cash flow was $3.0B. Both were below the prior-year quarter's $3.7B and $3.3B. Nine-month free cash flow was $5.6B, up 35% from a year earlier.
Segment results:
- Aeronautics: sales rose 13% to $8.2B, on F-35 and C-130J programs. Operating profit rose 9% to $743M.
- Missiles and Fire Control: sales rose 24% to $4.5B. Operating profit rose 24% to $631M.
- Rotary and Mission Systems: sales rose 3% to $4.5B. Operating profit rose 4% to $524M.
- Space: sales rose 4% to $3.5B. Operating profit was flat at $331M.
Nine-month sales were $58.8B, up 7.4%. Nine-month diluted EPS was $22.36 versus $15.69 a year earlier.
How Large Is the Record Backlog and What Is Driving It?
The backlog reached $292.0B, up 27% from the second quarter, and missile demand is the main driver. It includes a $52.5B multi-year award to produce PAC-3 Missile Segment Enhancement interceptors, which are used in air and missile defense.
Production ramps for PAC-3 and THAAD interceptors, along with GMLRS and PrSM strike missiles, powered the 24% sales growth at Missiles and Fire Control. Governments are replenishing munitions stocks drawn down by ongoing conflicts, and the multi-year contract structure gives the company visibility on volumes. Lockheed has said the backlog will support sales growth for years to come.
How Did Lockheed Martin Change Its 2026 Guidance?
Lockheed raised every key 2026 metric, extending the increase it made in July. The new ranges, with the July ranges in parentheses:
- Sales: about $80.0B-$82.0B ($79.75B-$81.75B)
- Business segment operating profit: about $8.575B-$8.675B ($8.5B-$8.7B)
- Diluted EPS: about $30.35-$30.75 ($29.95-$30.65)
- Free cash flow: about $7.8B-$8.0B ($7.0B-$7.2B)
The free cash flow increase of roughly $800M at the midpoint is the largest change. The segment operating profit range narrowed, with its midpoint rising modestly.
Why Did the Stock React This Way?
Shares rose because the quarter combined an earnings beat, a guidance increase and a backlog figure that extends revenue visibility. The beat on EPS was roughly 6% to 7% above consensus. Peers RTX (RTX) and Northrop Grumman (NOC) also raised 2026 forecasts this week, which points to sector-wide demand for munitions and air defense rather than a company-specific effect.
Strategic Context: F-35 and Capital Returns
The F-35 program is the main open risk. Lockheed disclosed that costs incurred on Lot 20 advance acquisition began to exceed the current contractual authorization during the quarter. Negotiations on Lot 20 and later F-35 contracts continue. Without additional funding, the program could weigh on future results.
F-35 deliveries reached 94 aircraft in the first nine months of 2026, down from 143 in the same period of 2025. C-130J deliveries rose to 10 from 2.
On capital returns, Lockheed paid $2.4B in dividends over nine months and announced its 24th consecutive annual dividend increase. It made no share repurchases in the period. Capital expenditures were $1.3B for the nine months.
CEO Jim Taiclet said teams are fielding scalable capabilities by pairing proven systems with digital technologies including AI and autonomy, alongside work with startups and commercial partners.
Outlook
Lockheed Martin enters the final quarter with a $292B backlog, a second guidance increase and missile programs scaling up. Missiles and Fire Control is now the fastest-growing segment, and PAC-3 volumes are locked in by a multi-year award. The F-35 Lot 20 funding talks, along with delivery timing, are the main variables for 2027 results.
Mentioned tickers: LMT, RTX, NOC
