NYSE:LMT Stock Crashes Below $425 as Lockheed’s Program Failures Shock Wall Street

Lockheed Martin Plunges on $1.6B Program Hit — But Strategic Tailwinds Keep LMT in Play

Q2 Collapse: Earnings Implode as Classified Programs Trigger Massive Write-Down

Lockheed Martin (NYSE:LMT) cratered to $423 this week after Q2 results revealed a staggering 65% drop in operating income, driven by $1.6 billion in unexpected charges tied to underperforming aerospace and rotary programs. GAAP earnings per share crashed to $1.46, down from $6.85 a year earlier, missing consensus by over $4.00/share. Net income shrank to just $342 million, a far cry from the $1.64 billion booked in Q2 2024.

The headline charge — a $950 million loss on a classified aircraft initiative within Aeronautics — hammered segment profitability. Meanwhile, Rotary & Mission Systems recorded a $570 million write-down on the Canadian Maritime Helicopter Program and an additional $95 million hit on Turkish contracts. In total, the company erased nearly $5.83/share in one-off costs.

Backlog Solid, But Cash Flow Shocks Undermine Buyback Firepower

Free cash flow flipped negative to –$150 million, down from $1.5 billion positive a year ago, as working capital and milestone payment delays gutted operations. Cash from operations collapsed to $201 million from $1.9 billion, and share repurchases slowed to $400 million, despite the stock trading at a multi-quarter low.

Still, management reaffirmed full-year guidance: $73.75–$74.75 billion in revenue and $6.6–6.8 billion in FCF — signaling confidence that program instability is temporary and contained.

Segment Dissection: Missiles Shine, Helicopters Burn

• Aeronautics: Sales rose 2% to $7.42B, but the segment swung from $751M in profit to a $98M loss, mainly due to the secretive aircraft write-down. F-35 demand remains resilient, but performance risk now clouds future margins.

• Missiles & Fire Control: A standout, with revenue jumping 11% to $3.43B, and margin expansion tied to robust JASSM and LRASM orders. This division now anchors the bullish case for LMT’s core cash engine.

• Rotary & Mission Systems: Disaster zone — revenue fell 12%, and the unit posted a $172M operating loss from the dual helicopter program setbacks. Analysts flagged Sikorsky as an ongoing liability if new orders don’t materialize.

• Space: Modest growth of 4% in revenue and 5% in profit, driven by GPS IIIF, Orion, and satellite projects. Not a breakout story, but a steady contributor.

Insiders Sell, Institutions Watch as Price Slips Near 52-Week Low

Insider activity tilted bearish: Robert Lightfoot, Stephanie Hill, and Paul Harry Edward III all sold stock in Q1 and Q2, at levels near or above $440. No insider purchases have been recorded since the Q2 collapse — a point of concern for value investors watching for internal conviction.

View latest insider activity here:
LMT insider transactions

Technical Pressure: $410–$418 Is the Pivot Zone to Watch

LMT stock plunged 11.6% post-earnings before stabilizing above the $420 zone. The $410–$418 range now serves as major support; a breakdown below would open downside risk to the $390–$395 level. Recovery hinges on clearing $436.70, which marks the pre-gap resistance. RSI sits near 41, and trend momentum is deeply negative.

View live chart here:
LMT Real-Time Chart

Valuation Reset: Discount or Trap?

At ~18× forward EPS, LMT now trades below its 5-year average multiple (~21–23×), and significantly under RTX (~25×) and NOC (~24×). The PEG ratio near 1.4 suggests room for upside — but only if cash flow normalizes and aerospace costs stabilize.

The $166B backlog, 2.9% dividend yield, and strategic defense exposure all provide support, but credibility around execution must be rebuilt.

Geopolitical Tailwinds Still Favor Long-Term Allocations

Despite the Q2 disaster, Lockheed remains embedded in defense supply chains tied to U.S. rearmament, Taiwan tensions, NATO expansion, and Middle East realignment. Over $1.1 billion in new missile and F-35 orders flowed in last quarter alone. Defense budget tailwinds and bipartisan political backing for Lockheed’s platforms still underpin the long-term thesis — but investors now demand better cost control.

Final Verdict: LMT is a HOLD — Watch $410 for Reentry, Wait for Margin Clarity

Lockheed Martin’s Q2 was a reputational blow — not just a financial miss. The program failures call into question management oversight and execution risk in classified aerospace. Still, fundamentals like backlog, strategic moat, and missile demand are intact.

Until free cash flow rebounds, Aeronautics stabilizes, and insider sentiment turns, the stock should be treated as a hold, not a bottom-fishing opportunity. A break above $436.70 could reopen a move to $465–$480, while a failure below $410 puts $390 in play.

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