• If you are wondering whether Lockheed Martin at around US$520 per share still offers value, it helps to step back from the headlines and look at what the current price actually implies.
• Over the last week the stock is up 1.6%, while over the past month it is down 14.9%. The 1 year return sits at 14.9% and the 5 year return at 53.4%. Together, these figures are enough to make many investors ask whether the recent pullback changes the risk and opportunity balance.
• Recent attention has focused on Lockheed Martin's role as a major U.S. defense contractor and its position in global defense supply chains. This often puts the stock in the spotlight when geopolitical tensions rise or defense priorities shift. These themes help frame how investors interpret the recent mix of shorter term weakness and longer term gains in the share price.
• Simply Wall St's valuation model scores Lockheed Martin at 6 out of 6 on its valuation checks. Next you will see how different valuation approaches line up on this stock and, at the end of the article, a more complete way to think about valuation beyond any single metric.

Approach 1: Lockheed Martin Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth today by projecting its future cash flows and discounting them back to a single present value figure.

For Lockheed Martin, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow stands at about $5.55b. Based on analyst inputs for the next few years and then extrapolated estimates by Simply Wall St, projected free cash flow reaches $8.14b in 2030. Intermediate projections, such as $6.64b in 2026 and $7.56b in 2029, are also built into the model to shape that path.

When all of these projected cash flows are discounted back to today in dollars, the DCF model arrives at an estimated intrinsic value of about $675.20 per share. Compared with the current share price of roughly $520, this implies the stock trades at a 22.9% discount to that DCF estimate, which suggests the shares may be undervalued on this measure alone.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Lockheed Martin is undervalued by 22.9%. Track this in your watchlist or portfolio, or discover 47 more high quality undervalued stocks.

Approach 2: Lockheed Martin Price vs Earnings

For a profitable company, the P/E ratio is a useful way to gauge how much you are paying for each dollar of earnings, because it ties the share price directly to the business’s current profit base.

What counts as a “normal” P/E usually reflects a mix of growth expectations and risk. Higher expected earnings growth or perceived resilience tend to support a higher P/E, while greater uncertainty or weaker outlooks often justify a lower one.

Lockheed Martin currently trades on a P/E of about 25.0x. That sits below the Aerospace & Defense industry average of roughly 35.4x and the peer group average of about 48.7x. Simply Wall St’s Fair Ratio for Lockheed Martin is 36.3x. This is its proprietary estimate of what a reasonable P/E might be for this specific company, given factors such as earnings growth, margins, industry, market cap and risk profile.

Because the Fair Ratio is tailored to the company and not just a sector snapshot, it can offer a more targeted reference point than broad industry or peer comparisons. On this basis, Lockheed Martin’s current P/E of 25.0x sits below the 36.3x Fair Ratio, which indicates that the stock may be undervalued on this metric.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Lockheed Martin Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so Narratives bring that to life by letting you attach a clear story about Lockheed Martin’s future to the numbers you are using for revenue, earnings, margins and fair value. You can then automatically compare that fair value to today’s share price to help you decide whether the stock fits your own buy or sell rules.

On Simply Wall St’s Community page, Narratives are an easy tool used by millions of investors. You can see, for example, one Narrative that prices Lockheed Martin at a fair value of about US$566.77 with relatively cautious growth and P/E assumptions, alongside another that prices it at about US$770.00 with higher assumed growth and a richer future P/E. Both of those Narratives update as new news, contracts or earnings numbers are added so the story, the forecast and the fair value stay in sync for you in real time.

Do you think there's more to the story for Lockheed Martin? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.