Driven by geopolitical demand shock, strategic positioning towards technology, and increased operating efficiency, Lockheed Martin reported stronger-than-expected 2Q2026 results; full-year outlook is also raised.
Will Lockheed Martin report higher order backlog by 3Q2026?
TL;DR:
Revenue and EPS both cleared the Street by a wide margin. The company reported profit of $1.84 billion, or $7.94 per share, on revenue of $20.06 billion, versus analysts' expectations of $7.22 per share on $19.43 billion — a beat of roughly 10% on EPS and 4% on revenue.
Free cash flow swung dramatically positive. Cash from operations reached $3.2 billion, up from $201 million a year earlier, and free cash flow was $2.9 billion, compared to negative $150 million in the prior-year quarter — one of the largest quarter-over-quarter cash generation reversals in recent memory for the name.
Backlog hit a record and is now the dominant part of the story. The company reported a record backlog of $230.4 billion, up from $193.6 billion at year-end 2025, boosted by $65 billion in new orders during the quarter, with total backlog up 38.3% from $166.5 billion a year earlier.
Operating margin expanded sharply. Operating margin came in at 12.4%, up 8.2 percentage points year on year, reflecting the absence of last year's program charges plus genuine production efficiency gains.
Guidance was raised across every major line, not just reaffirmed. Full-year 2026 sales outlook was lifted to approximately $79.75 billion to $81.75 billion, up from $77.5 billion to $80.0 billion, and full-year diluted EPS guidance was raised to $29.95–$30.65 from $29.35–$30.25. All major segments increased their sales outlooks, pointing to company-wide strength rather than a single-line story.
Key Debates:
Is the margin recovery structural or an easy comp?
How durable is the demand wave versus geopolitically-driven and potentially lumpy?
What will the Valuation catch-up play be?
According to the company:
"These results are powered by consistent performance on the commitments we've made and by our investments to support the missions our customers will face next. Over the quarter, we took a major step forward in transforming munitions production, putting the framework agreements we announced earlier this year into action by signing a $35 billion multi-year contract with the Missile Defense Agency for THAAD. We continue to innovate at the speed our customers' missions demand, taking our Sanctum counter-drone system from concept to successful live fire testing in just 45 days by combining a battle manager, radar, launcher, and combat-proven missile into one engagement chain. And, we are investing strategically to strengthen global defense manufacturing capabilities through our collaboration with General Motors Defense in the U.S. and our agreement with Rheinmetall to co-produce ATACMS in Europe."
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