Lockheed Martin Lifts 2026 Sales and Cash Outlook Again

The Tip Desk · October 22, 2026 · 3 min read

Third-quarter sales were $20.7 billion and the company now sees 2026 free cash flow of about $7.8 billion to $8.0 billion, after raising guidance for the second straight quarter.

Lockheed Martin (LMT) raised its 2026 sales, earnings and free-cash-flow outlook for the second consecutive quarter after third-quarter sales of $20.7 billion, up 11% from a year earlier, matching the year-over-year growth rate of the second quarter.

The global defense technology company now expects 2026 sales of about $80.0 billion to $82.0 billion, versus a July range of $79.75 billion to $81.75 billion, and diluted earnings of about $30.35 to $30.75 a share, versus $29.95 to $30.65. Free cash flow is now projected at about $7.8 billion to $8.0 billion, versus $7.0 billion to $7.2 billion. Chairman, President and CEO Jim Taiclet said the company is raising the outlook for sales, earnings per share and free cash flow.

Net earnings were $1.8 billion, or $7.97 a share, compared with $1.6 billion, or $6.95 a share, a year earlier. Business segment operating profit increased $200 million to $2.23 billion, which the company attributed to munition ramps at Missiles and Fire Control and higher volume at Aeronautics. Cash from operations was $3.4 billion and free cash flow $3.0 billion, down $290 million and $348 million from a year earlier, which the company said was primarily due to higher customer receipts in the third quarter of 2025.

Backlog grew 27% since the second quarter of 2026 to a record $292.0 billion, including $52.5 billion associated with the multi-year award to produce PAC-3 Missile Segment Enhancement interceptors.

Missiles and Fire Control was the fastest-growing segment. Sales increased 24% to $4.50 billion, including $480 million on integrated air and missile defense programs from production ramps on PAC-3 and THAAD and $330 million on tactical and strike missile programs from ramps on GMLRS and PrSM. Operating profit rose 24% to $631 million, with the operating margin holding at 14.0% versus 14.1%.

Aeronautics sales increased 13% to $8.21 billion. The company said the increase was primarily $710 million on the F-35 program from higher volume on production and sustainment contracts and $270 million on the C-130 program from liquidation of pre-contract costs incurred in anticipation of a contract award, partly offset by $130 million lower F-16 sales. Operating profit increased 9% to $743 million. The operating margin compressed to 9.0% from 9.4%, as $40 million of unfavorable profit adjustments each on F-16 and C-130 offset higher volume.

Rotary and Mission Systems sales increased 3% to $4.51 billion, with operating profit up 4% to $524 million after a $40 million favorable profit adjustment on a contracting matter, offset by $45 million of unfavorable adjustments on Heavy Lift and Seahawk. Space sales increased 4% to $3.49 billion, including $185 million higher Fleet Ballistic Missile and Next Generation Interceptor volume, partly offset by $115 million lower national security space sales on the OPIR mission lifecycle. Space operating profit was unchanged at $331 million.

The company said it remains in negotiations with the U.S. Government on production contracts for F-35 lots 20 and higher. Costs incurred began to exceed the current contractual authorization and funding on the Lot 20 advance acquisition contract during the third quarter of 2026. Without additional authorization and funding, the company said, results of operations, cash flows and financial condition will be negatively impacted in future periods.

The effective income tax rate fell to 15.1% from 16.5%, primarily from higher foreign derived deduction eligible income deductions, partly offset by the absence of a prior-year federal audit resolution.