Security and Aerospace company Lockheed Martin (NYSE:LMT) fell short of the market’s revenue expectations in Q2 CY2025, with sales flat year on year at $18.16 billion. On the other hand, the company’s outlook for the full year was close to analysts’ estimates with revenue guided to $74.25 billion at the midpoint. Its GAAP profit of $1.46 per share was 77.3% below analysts’ consensus estimates.
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Lockheed Martin (LMT) Q2 CY2025 Highlights:
- Revenue: $18.16 billion vs analyst estimates of $18.59 billion (flat year on year, 2.3% miss)
- EPS (GAAP): $1.46 vs analyst expectations of $6.42 (77.3% miss)
- Adjusted EBITDA: $1.09 billion vs analyst estimates of $2.53 billion (6% margin, 57% miss)
- The company reconfirmed its revenue guidance for the full year of $74.25 billion at the midpoint
- EPS (GAAP) guidance for the full year is $21.85 at the midpoint, missing analyst estimates by 19.7%
- Operating Margin: 4.1%, down from 11.9% in the same quarter last year
- Free Cash Flow was -$150 million, down from $1.51 billion in the same quarter last year
- Backlog: $166.5 billion at quarter end, up 5.2% year on year
- Market Capitalization: $107.9 billion
"Over the course of the past few months, Lockheed Martin systems and platforms once again proved highly effective in combat operations and in deterring further aggression. Our F-35s, F-22s, PAC-3, THAAD, Aegis and many others, crewed by the soldiers, airmen, sailors, marines and guardians of the U.S. and its Allies, and supported by our own dedicated teammates, performed extremely well in the most crucial and challenging situations," 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 performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Lockheed Martin grew its sales at a sluggish 2.7% compounded annual growth rate. This fell short of our benchmarks and is a tough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Lockheed Martin’s annualized revenue growth of 3.2% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak. 
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 $166.5 billion in the latest quarter and averaged 7.3% 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 $18.16 billion of revenue was flat year on year, falling short of Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 5.3% over the next 12 months. Although this projection implies 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 been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 11.9%.
Looking at the trend in its profitability, Lockheed Martin’s operating margin decreased by 4.9 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 4.1%, down 7.7 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.
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 4.9% annually over the last five years while its revenue grew by 2.7%. 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.
Diving into the nuances of Lockheed Martin’s earnings can give us a better understanding of its performance. As we mentioned earlier, Lockheed Martin’s operating margin declined by 4.9 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 19.4% show it’s continued to underperform. These results were bad no matter how you slice the data.
In Q2, Lockheed Martin reported EPS at $1.46, down from $6.85 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 $17.76 to grow 58.2%.
Key Takeaways from Lockheed Martin’s Q2 Results
We were impressed by how significantly Lockheed Martin blew past analysts’ backlog expectations this quarter. On the other hand, its full-year EPS guidance missed and its revenue fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 7.3% to $427.78 immediately following the results.
Lockheed Martin underperformed this quarter, but does that create an opportunity to invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.