Lockheed Martin Corporation (LMT) Stock Valuation — DCF Analysis
Aerospace & Defense · NYSE
Current Price
$540.33
Intrinsic Value
$767.87
+29.6% margin of safety
COMPETITIVE MOAT
↑Deep Government Relationships
LMT benefits from decades-long, deeply entrenched relationships with defense departments globally. This creates significant switching costs and barriers to entry for competitors.
↑Technological Expertise & R&D
The company possesses highly specialized technological capabilities and invests heavily in research and development. This allows for the creation of complex, proprietary defense systems.
↑Scale and Production Capacity
LMT's massive scale and established production infrastructure are critical for fulfilling large, long-term government contracts. This scale is difficult for new entrants to replicate.
INVESTMENT RISKS
↓Regulatory Scrutiny and Investigations
Recent investigations into officers and directors suggest potential governance issues. This could lead to fines, reputational damage, and increased oversight.
↓Dependence on Government Spending
LMT's revenue is heavily reliant on defense budgets, which can fluctuate based on geopolitical events and political priorities. Cuts in spending directly impact the company.
↓Competition from Emerging Technologies
While LMT is a leader, advancements in areas like private space launch (e.g., SpaceX) could disrupt traditional defense procurement models and create new competitive pressures.
Base case
LMT base case valuation
A base case discounted cash flow model for LMT estimates an intrinsic value of about $767.87 per share, against a current price of $540.33. The model assumes 13.5% annual free cash flow growth, a 10.0% discount rate, and a 22x exit multiple.
Intrinsic Value
$767.87
Margin of safety
+29.6%
Expected annual return
+7.3%
Base case assumptions: 13.5% annual growth, 10.0% discount rate, 22x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the LMT valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Lockheed Martin Corporation respond.
Open DCF Calculator for LMTCompany Overview
Lockheed Martin Corporation stands as a prominent global security and aerospace enterprise, specializing in the comprehensive lifecycle of advanced technological systems. Its expertise spans the research, design, development, manufacturing, integration, and ongoing sustainment of cutting-edge products and services across the world. The company's diverse operations are structured into four key segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space. The Aeronautics division is responsible for creating and producing leading-edge combat and air mobility aircraft, alongside unmanned aerial vehicles and their related innovations. The Missiles and Fire Control segment delivers sophisticated air and missile defense systems; tactical and precision air-to-ground weapon systems; comprehensive logistics; advanced fire control; mission operations, readiness, engineering support, and integration services; both crewed and uncrewed ground vehicles; and energy management solutions. Within the Rotary and Mission Systems segment, the portfolio includes military and commercial helicopters, naval surface ships, land and sea-based missile defense systems, advanced radar technologies, maritime and airborne mission and combat systems, intricate command and control solutions, cybersecurity services, and simulation and training platforms. The Space division focuses on satellites, space transportation systems, strategic, advanced strike, and defensive missile systems, as well as classified systems and services vital for national security. This segment further enhances situational awareness through network enablement, integrating space and ground-based systems to empower customers in gathering, analyzing, and securely distributing crucial intelligence data. Lockheed Martin primarily serves the United States government, alongside fulfilling foreign military sales facilitated through U.S. government contracts. Established in 1912, the corporation maintains its headquarters in Bethesda, Maryland.
Financial Metrics — LMT Stock Valuation Data
Revenue/Share (TTM)
$326.73
FCF/Share (TTM)
$24.63
ROIC (TTM)
16.8%
ROE (TTM)
74.5%
P/FCF
22.0x
EV/EBITDA
16.9x
FCF Yield
4.54%
Debt/Equity
2.76x
Based on trailing twelve-month data, LMT shows a free cash flow per share of $24.63 and a ROIC of 16.8%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 22.0x and FCF yield of 4.54% are important context metrics when evaluating LMT's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of LMT?
Lockheed Martin Corporation currently generates $24.63 in free cash flow per share. At the current price of $540.33, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is LMT undervalued?
LMT trades at a P/FCF ratio of 22.0x with a free cash flow yield of 4.54%. This P/FCF is in a moderate range. However, whether LMT is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value LMT stock using DCF?
To perform a DCF valuation on Lockheed Martin Corporation: (1) Start with the trailing free cash flow per share ($24.63) as the base, (2) project future FCF growth over 5-10 years based on Aerospace & Defense industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting LMT's risk profile — with a debt-to-equity of 2.76x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to LMT?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Lockheed Martin Corporation, this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Aerospace & Defense trends, then discounting those amounts to today's dollars. LMT's ROIC of 16.8% indicates strong capital efficiency, which supports higher growth assumptions in the DCF model.
How does WACC affect LMT stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For LMT, with a debt-to-equity ratio of 2.76x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 16.9x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See LMT PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Industrials valuationsDCF and P/E value LMT with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.