Lockheed Martin Hits Record $194B Backlog, Unveils Historic Missile Production Deals

January 29, 2026 · by Fintool Agent

LMTNOCRTX

+1 more

Lockheed Martin+5.27% just posted its strongest quarter in years—and then announced landmark deals that will reshape the defense industrial base.

The world's largest defense contractor reported Q4 revenue of $20.3 billion (up 9% year-over-year) and exited 2025 with a record $194 billion backlog, approximately 2.5 times annual sales. 1 More importantly, the company unveiled a new framework agreement to quadruple THAAD missile interceptor production to 400 per year, following the historic PAC-3 deal announced earlier this month that will triple production to 2,000 annually. 2

Shares surged nearly 5% to $627, hitting a 52-week high of $645.67 intraday—validating the defense sector's position as geopolitical uncertainty's biggest beneficiary.

The Numbers That Matter

The dramatic year-over-year profit improvement largely reflects the absence of $1.7 billion in classified program charges that hammered Q4 2024 results. 8 But even adjusting for one-time items, the underlying business is accelerating.

Full-year 2025 sales reached $75 billion, up 6%, while free cash flow of $6.9 billion exceeded prior guidance despite $860 million in pension pre-funding. 9

Ask Fintool AI Agent

Compare Lockheed Martin's margins and growth to Northrop Grumman and RTX over the last 8 quartersShow me the F-35 program's contribution to Lockheed's revenue over the past 3 yearsWhat is Lockheed Martin's dividend history and yield compared to defense peers?

Missiles & Fire Control: The Breakout Segment

The real story is missiles. The Missiles & Fire Control segment delivered Q4 sales of $4.0 billion, up 18% year-over-year, driven by production ramps on PAC-3 and precision fires programs like JASSM/LRASM. 1

For the full year, MFC sales jumped 14% to $14.5 billion with a 13.8% operating margin—the company's most profitable segment. 2

CEO Jim Taiclet framed the moment bluntly: "With a record $194 billion backlog, 6% year-over-year sales growth, and free cash flow generation above our prior expectation, 2025 marked a year of unprecedented demand for Lockheed Martin capabilities." 3

Historic Multi-Year Missile Deals

The market is repricing Lockheed because of what happens next.

Earlier this month, the company announced a landmark 7-year framework agreement with the Department of War for PAC-3 MSE interceptors. Today, it disclosed a similar long-term deal for THAAD missiles. 4

The numbers are staggering:

Taiclet, speaking from Camden, Arkansas—where Lockheed has produced over 700,000 missiles and rockets—announced groundbreaking for a new "Munitions Acceleration Center" facility. 7 The company plans "multibillion-dollar investment to accelerate munition production over the next 3 years, including building facilities across 5 states." 8

These aren't typical Pentagon contracts. CFO Evan Scott explained the structure: "These multi-year agreements are in no way intended to be punitive. This is a customer partnering with us to find the best, most efficient way to rapidly scale capabilities to the warfighter." 9 The deals include working capital support and performance incentives with profit-sharing above baseline targets. 10

Ask Fintool AI Agent

What is Lockheed Martin's PAC-3 missile pricing and margin profile?Find Congressional testimony about the PAC-3 and THAAD multi-year framework dealsShow me Raytheon's competing missile systems and how they compare to PAC-3

2026 Outlook: Growth Accelerates

Management's 2026 guidance landed above consensus:

The EPS jump reflects normalized margins after 2025's program charges, plus the operating leverage from higher volumes.

By segment, MFC leads with 14% expected revenue growth at the midpoint. Space follows at 5% growth, driven by the Next Generation Interceptor, Fleet Ballistic Missile, and Space Development Agency programs. 5 Aeronautics guides to low single-digit growth with F-35 production holding steady at 156 aircraft per year. 6

F-35: Record Deliveries, Mission-Critical Performance

Lockheed delivered a record 191 F-35 fighter jets in 2025, up from 110 in 2024—a 74% increase that underscores the production ramp's momentum. 7 In Q4 alone, the company shipped 48 aircraft. 8

More significantly, Taiclet highlighted recent combat performance: "During the U.S. military's recent Operation Absolute Resolve, F-35 and F-22 fighter jets, RQ-170 Sentinel stealth drones, and Sikorsky Black Hawk helicopters were decisive contributors to enable American soldiers, sailors, marines, and airmen to successfully execute extremely difficult missions and return safely." 9

The company also committed $1 billion of strategic internal investment for F-35 sustainment to improve mission capable rates across the fleet. 10 This addresses a long-standing Pentagon concern about readiness levels.

Recent awards totaling over $15 billion include Lot 18 and 19 contracts, the full FY2026 air vehicle sustainment contract, and modifications supporting Lots 20 and 21 production. 11

Defense Sector Stock Performance

Lockheed's surge caps a strong run for defense contractors as geopolitical tensions elevate spending visibility.

Peers Northrop Grumman+0.44% and RTX Corp.+0.01% reported earlier this week, both reaffirming dividends despite Trump administration scrutiny of defense contractor capital returns. 1 General Dynamics-2.56% rounds out the Big Four.

Golden Dome and Space-Based Interceptors

Looking further ahead, Lockheed is positioning for the administration's "Golden Dome" homeland missile defense initiative.

Taiclet disclosed the company is "building an operable space-based interceptor that we want to fly in space by 2028." 2 He emphasized Lockheed's unique combination of guidance technology, satellite manufacturing, and kill vehicle expertise: "We know in this company how to hit, as my chief engineer says, 'a bullet with a bullet in space, but do it from space.'" 3

The Space segment already has a $1 billion contract for military-hardened, low-orbit tracking layer satellites. 4

Ask Fintool AI Agent

What is the Golden Dome missile defense program and which contractors are involved?Compare Lockheed Martin's space segment to Northrop Grumman's space businessBuild a DCF model for Lockheed Martin with the new 2026 guidance

Capital Allocation: Elevated Investment Cycle

Free cash flow guidance of $6.5-6.8 billion includes a significant step-up in capital expenditures to $2.5-2.8 billion—roughly 70% higher than 2025's $1.6 billion. 1 Combined with independent R&D, total internal investment approaches $5 billion in 2026. 2

When asked about Trump's executive order linking dividends and buybacks to delivery performance, Taiclet was measured: "We will be evaluating all of our capital deployment options as time progresses. We'll announce those decisions as they occur publicly." 3

In 2025, Lockheed returned $6.1 billion to shareholders—$3.1 billion in dividends and $3.0 billion in buybacks. 4

What to Watch

Near-term catalysts:

• PAC-3 and THAAD contract definitization (requires Congressional appropriations)
• FY2027 defense budget proposal expected by March
• Q1 2026 earnings (April) for early delivery metrics

Longer-term:

• MFC revenue compound annual growth rate "at least double digits through end of decade" 5
• Space-based interceptor prototype flight targeted for 2028
• F-35 mission capable rate improvements from $1B investment

The defense industrial base is entering a new era of long-term contracting and accelerated production. Lockheed Martin, with its $194 billion backlog and landmark framework agreements, sits at the center.

Related Companies: Lockheed Martin+5.27% · Northrop Grumman+0.44% · RTX Corp.+0.01% · General Dynamics-2.56%