• For investors wondering whether Lockheed Martin, at about US$514 per share, still offers value or if the easier gains are already behind it, this article focuses squarely on what the current price may be implying.
• The stock has returned 0.9% over the last 7 days, while the 30-day return is a 19.4% decline, set against a 3.5% year-to-date gain and a 12.1% return over the past year.
• Recent news coverage has focused on Lockheed Martin's role in ongoing defense contracts and its position as a key contractor in US and allied defense programs. These developments help frame how investors may be thinking about future cash flows, contract stability, and the risk profile reflected in the share price.
• At the moment the company scores 6 out of 6 on Simply Wall St's valuation checks, giving it a value score of 6. The next sections will unpack what different valuation approaches imply for the stock, followed by a more holistic way to think about value.

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

A Discounted Cash Flow, or DCF, model takes estimated future cash flows, then discounts them back to today to estimate what the business might be worth right now.

For Lockheed Martin, the latest twelve month Free Cash Flow is about $5.55b. Simply Wall St uses a 2 Stage Free Cash Flow to Equity model, combining analyst projections where available and then extrapolating further out. For example, projected Free Cash Flow for 2026 is $6.64b, and the 2030 projection is $8.14b, with interim years between those levels. All figures are in $.

Discounting these projected cash flows results in an estimated intrinsic value of about $690.90 per share. Compared with the current share price of roughly $514, the model suggests the stock is 25.6% undervalued based on these inputs and assumptions.

This single model suggests investors are paying a discount to the cash flows currently being projected for Lockheed Martin.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Lockheed Martin is undervalued by 25.6%. Track this in your watchlist or portfolio, or discover 44 more high quality undervalued stocks.

Approach 2: Lockheed Martin Price vs Earnings

For a profitable company like Lockheed Martin, the P/E ratio is a useful shorthand for how much investors are paying for each dollar of current earnings. Investors usually accept a higher P/E when they expect stronger earnings growth or see lower risk, and a lower P/E when they expect slower growth or see higher risk.

Lockheed Martin currently trades on a P/E of 24.7x. That sits below the Aerospace & Defense industry average P/E of 37.3x and below the peer group average of 50.4x, so the stock is priced at a lower multiple than many sector peers.

Simply Wall St’s Fair Ratio for Lockheed Martin is 36.4x. This is a proprietary estimate of what a reasonable P/E might be, given factors such as the company’s earnings profile, its industry, profit margins, market cap and specific risks. Because it adjusts for these fundamentals, the Fair Ratio can be more tailored than a simple comparison to industry or peer averages, which treat all companies as if they have similar prospects and risk levels. Comparing 24.7x to the Fair Ratio of 36.4x indicates that the stock is trading below that benchmark.

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. Narratives bring your view of Lockheed Martin’s story together with your own assumptions on future revenue, earnings, margins and fair value, then compare that fair value to today’s price. All of this is inside an easy tool on Simply Wall St’s Community page that updates as news and earnings arrive. This is why one investor might build a “multi year fortress” narrative with a Fair Value around US$866.67, while another focuses on policy constraints and assigns a Fair Value near US$566.77. You can see both storylines, their forecasts and implied decisions side by side instead of relying on a single number.

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.