Lockheed Martin Corporation (LMT) Intrinsic Value & DCF Valuation
Aerospace & Defense · NYSE
Current Price
$558.46
Intrinsic Value
$632.78
+11.7% margin of safety
What Is Lockheed Martin Corporation's Intrinsic Value?
As of 2026-07-30, the base-case DCF model estimates the intrinsic value of Lockheed Martin Corporation (LMT) at $632.78 per share, compared with a market price of $558.46, a margin of safety of +11.7%. The base case assumes 5.7% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $496.9 to $790.04. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Lockheed Martin Corporation (LMT) Undervalued?
At $558.46, LMT trades about 11.7% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Government Contracts & Relationships
Deeply entrenched relationships with governments worldwide provide a stable, long-term revenue stream. These partnerships are difficult for competitors to replicate due to security clearances and established trust.
↑Technological Expertise & R&D
Significant investment in research and development creates proprietary technologies and advanced defense systems. This innovation barrier makes it challenging for new entrants to compete on capability.
↑Scale & Manufacturing Prowess
Massive production capacity and complex supply chain management offer economies of scale. This allows LMT to undertake large, multi-year defense projects that smaller firms cannot handle.
INVESTMENT RISKS
↓Program Delays & Cost Overruns
Large, complex defense projects are prone to schedule slippage and budget increases. These issues can negatively affect profitability and investor sentiment.
↓Regulatory & Political Scrutiny
The defense industry faces intense government oversight and political influence. Changes in defense spending priorities or procurement policies can pose significant challenges.
↓Technological Disruption & Competition
Emerging technologies and agile competitors could challenge LMT's established dominance. The pace of innovation in areas like AI and cyber warfare requires constant adaptation.
Base case
LMT base case valuation
Intrinsic Value
$632.78
Margin of safety
+11.7%
Expected annual return
+2.5%
Base case assumptions: 5.7% annual growth, 10.0% discount rate, 15x exit multiple, 5 year projection. Data as of 2026-07-30.
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)
$334.59
FCF/Share (TTM)
$37.92
ROIC (TTM)
20.1%
ROE (TTM)
86.2%
P/FCF
14.8x
EV/EBITDA
14.8x
FCF Yield
6.77%
Debt/Equity
2.34x
On a trailing twelve-month basis, LMT generates free cash flow per share of $37.92 alongside a ROIC of 20.1%, both central inputs for a DCF valuation. Its P/FCF ratio of 14.8x and FCF yield of 6.77% then frame how LMT is priced against peers on a cash flow basis.
Frequently Asked Questions
What is the intrinsic value of LMT?
Lockheed Martin Corporation currently generates $37.92 in free cash flow per share. At the current price of $558.46, 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 14.8x with a free cash flow yield of 6.77%. A low P/FCF means investors are paying less per dollar of free cash flow; whether that is cheap depends on the company's growth, cyclicality, and capital intensity. 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 ($37.92) 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 2.34x, 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 20.1% reflects how efficiently the company converts invested capital into profit.
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 2.34x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 14.8x, 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 2026-07-30. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.