Investment Thesis
Lockheed Martin shows solid revenue growth (+5.6% YoY) and strong ROE (19.9%), but fundamentals are deteriorating with declining net income (-6.0%), negative free cash flow (-$291M), and elevated leverage (2.74x D/E). The combination of margin compression and weak cash generation poses financial stress despite stable defense sector positioning.
Strengths
- Strong revenue growth of 5.6% YoY in stable defense/aerospace sector
- Solid ROE of 19.9% indicates effective capital returns
- Adequate interest coverage ratio of 8.1x demonstrates debt servicing capability
Risks
- Negative free cash flow of -$291M despite positive operating cash flow indicates working capital strain and CapEx exceeding cash generation
- High leverage ratio of 2.74x D/E limits financial flexibility; debt service vulnerable to revenue/margin deterioration
- Declining net income (-6.0% YoY) and diluted EPS (-3.7% YoY) despite revenue growth signals profit margin compression and operational headwinds
- Quick ratio of 0.94x below 1.0 indicates potential liquidity stress and reliance on working capital conversion
Key Metrics to Watch
- Free cash flow trend and operating cash flow margin recovery
- Net profit margin recovery or continued compression
- Debt/Equity ratio reduction or stabilization
- Working capital management and quick ratio improvement
Financial Metrics
Revenue
18.0B
Net Income
1.5B
EPS (Diluted)
$6.44
Free Cash Flow
-291.0M
Total Assets
59.2B
Cash
1.9B
Profitability Ratios
Gross Margin
11.5%
Operating Margin
11.4%
Net Margin
8.3%
ROE
19.9%
ROA
2.5%
FCF Margin
-1.6%
Balance Sheet & Liquidity
Current Ratio
1.14x
Quick Ratio
0.94x
Debt/Equity
2.74x
Debt/Assets
87.4%
Interest Coverage
8.09x
Long-term Debt
20.5B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-29T15:03:50.733463 |
Data as of: 2026-03-29 |
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