What changed
$LMT — Designs and manufactures advanced military aircraft and defense systems.
🎯 Q1 FY26 | Rev $18B | EPS $6.44 vs $6.69 🔴 | Margin 11.4%
💡 Consensus expects a steady defense contractor with modest growth, but the Q1 miss (EPS $6.44 vs $6.69) and weak margins (gross 11.5%, operating 11.4%) suggest near-term headwinds from supply chain costs and program mix.
🏢 Business Quality: 8/10 | Valuation: fair
📉 Reward/Risk: Upside 8% to $570 (consensus FY2026 EPS ~$25 x 22.8x) vs downside 12% to $465 (miss on guidance, multiple contraction to 18x). Ratio ~0.67:1, unfavorable.
🔮 Catalyst: Q2 2026 earnings (late July): Watch for margin improvement and FCF generation. Metric: operating margin >12% and FCF >$1.5B. Failure signal: further margin compression or guidance cut.
💰 Entry: Ideal entry $490-510 (15-17% below current), where valuation would be ~18-19x FY2026 EPS.
Also in play: $BA $NOC $RTX $GD $LHX $SPR