Lockheed Martin's backlog reached an all-time high of $230 billion in fiscal Q2 2026, expanding by roughly $64 billion from a year earlier. Despite this record order book, the company's stock has fallen 19.6% over the past six months, trailing the S&P 500's 15.7% gain over the same period. The decline has pushed the stock's valuation to 18.2 times trailing earnings, a multiple below the 20.7 average recorded at quarter-ends over the previous three years.
Management used the fiscal Q2 2026 earnings call to report the record backlog and raise the company's annual outlook. The guidance targets 7.6% sales growth for fiscal 2026. An arithmetic scenario presented in the analysis suggests that if revenue grows at a faster pace of 9.0% annually for three years, while net margins and price-to-earnings multiples remain constant, the stock would be worth 30.1% more than its current price. This projected return relies almost entirely on increased sales volume rather than a premium valuation.
The primary driver for this potential growth is the Munitions and Fire Control segment, where sales climbed 19% in fiscal Q2 2026 compared to the prior year. Management attributed this acceleration to munition programs and F-35 production contributions. In late June, the Missile Defense Agency awarded Lockheed a seven-year contract valued at $35 billion to quadruple the production of an interceptor missile.
| Metric | Value / Period |
|---|---|
| Backlog (Fiscal Q2 2026) | $230 billion |
| Backlog Growth (YoY) | ~$64 billion |
| Trailing P/E Multiple | 18.2x |
| Projected 3-Year Return (Scenario) | 30.1% |
| Assumed Revenue Growth (Scenario) | 9.0% annually |
| Actual Revenue Growth (TTM to FQ2 2026) | 7.2% |
The scenario's assumed growth rate of 9.0% is faster than any of Lockheed's performance in the last three twelve-month periods. Sales grew by 5.5% in the twelve months to fiscal Q2 2024 and by just 1.1% in the twelve months to fiscal Q2 2025. The current trailing twelve-month growth of 7.2% also falls short of the scenario's requirement, though it is closer than previous periods.
For a three-year investment to break even under the same margin and multiple assumptions, annual revenue growth would need to decline to minus 0.1%. Lockheed's revenue has increased in each of its last three full fiscal years, with the slowest growth rate recorded at 2.4%.
Investors will receive their next update on delivery figures on or around October 22, 2026. Management stated on the recent call that the company is delivering more of ten specific munitions in 2026, alongside increased volumes of F-16s and C-130s. If sales growth falls significantly below the guided pace for fiscal 2026, it would suggest that orders are taking longer to convert into deliveries, increasing the risk associated with the company's large backlog.