Lockheed Martin (NYSE:LMT) saw its shares climb sharply in premarket trading Thursday, rising 6.6% to $548.50, as the defense giant delivered stronger-than-expected quarterly results and lifted its full-year outlook. The stock’s advance came even as broader market futures edged lower, underscoring investor enthusiasm for the company’s order pipeline and financial performance.
The company reported second-quarter revenue of $20.06 billion, surpassing Wall Street’s consensus estimate of $19.34 billion by 3.7%. Diluted earnings per share came in at $7.94, topping the $7.19 forecast by 10.4%. Free cash flow swung sharply positive to $2.92 billion from a negative $0.15 billion in the same period last year, driven by favorable timing of customer receipts and lower tax payments.
Orders provided a particularly strong signal for investors. Lockheed Martin booked $65 billion in new orders during the quarter, pushing the book-to-bill ratio to 3.2. Notably, even excluding the $35 billion THAAD (Terminal High Altitude Area Defense) contract, the book-to-bill ratio remained close to 1.5, indicating that underlying demand across the company’s portfolio is solid. Orders exceeded sales by nearly $10 billion.
Total backlog surged by $44 billion from March to $230.4 billion, with the THAAD contract accounting for roughly 80% of that increase. Analysts noted that stripping out the THAAD deal provides a clearer view of organic demand strength, which appears broad-based across missile systems, aeronautics, and other segments.
Management raised its full-year guidance, reflecting confidence in sustained growth. The midpoint of 2026 revenue guidance was lifted by $2.0 billion to $80.75 billion, approximately 2% above the consensus estimate of $79.14 billion. The midpoint for diluted EPS was raised by 50 cents to $30.30, about 1.3% above the consensus. Free cash flow guidance midpoint increased by $450 million to $7.10 billion.
CEO Jim Taiclet highlighted that revenue is expected to rise about 8% this year, with free cash flow projected to exceed $7 billion. The company’s free cash flow in the second quarter represented 14.5% of sales and 159% of net income, a notable improvement from the prior year’s quarter, which included $1.6 billion in program losses and $169 million in additional charges.
Operational momentum was most evident in the Missiles and Fire Control segment, where revenue climbed 19% to $4.10 billion and operating income rose 24% to $594 million. The increase was driven by higher production volumes of PAC-3, THAAD, and Precision Strike Missiles. The seven-year THAAD contract is expected to sustain elevated production rates for the foreseeable future, though revenue realization remains tied to manufacturing capacity.
Risks remain, however. The THAAD award is still classified as an undefinitized contract action, which allows for potential adjustments to final pricing. The strong cash flow was partly supported by timing factors, and execution risk persists on fixed-price development programs. Despite these caveats, the overall picture for Lockheed Martin remains robust, with demand extending well beyond the headline-grabbing THAAD order.
