Buffett Brain · Research note
Score updated 29 Oct 2026
LMT· Industrials
Lockheed Martin
Lockheed Martin's strong ROIC of 24% is overshadowed by high valuation and modest growth, failing Buffett's price and durability tests.
Buffett fit
Partial fit
Owner
42
Durability
63
Management
55
Price
32
Score updated 29 Oct 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Industrials stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If we owned 100% of Lockheed Martin, we'd be concerned about the high debt/equity ratio of 3.23 and the modest revenue CAGR of 4.38%.
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Lockheed Martin's durability is challenged by its reliance on government contracts and the cyclical nature of defense budgets.
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Management has effectively reduced the share count by 4.08% annually over 5 years, indicating shareholder-friendly policies.
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At a of 27.8 and an yield of 4.95%, the valuation is stretched.
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- What would change the call
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 1 of 24% is top-quintile for the sector, indicating strong capital efficiency.
- 2Share count reduced by 4.08% annually over 5 years, enhancing shareholder value.
- 3Interest coverage ratio of 6.3 suggests reasonable ability to meet debt obligations.
- 4/Net Income ratio of 1.38 indicates high earnings quality and cash conversion.
Concerns
6- 1 of 27.8 suggests high market expectations not supported by EPS growth.
- 2 of 10.15% is below sector top-quintile, indicating weak .
- 3Net debt/EBITDA of 2.01 is relatively high, limiting financial flexibility.
- 4Revenue CAGR of 4.38% is modest, questioning growth sustainability.
Price history
$630+89.5%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Lockheed Martin Corporation operates in aerospace and defense, generating revenue primarily through its Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space segments. The Aeronautics segment, including products like combat aircraft, is a major contributor. With a revenue of $75.05B and a net income of $5.02B, the business model relies on large government contracts. Unit economics show a of 10.15%, indicating limited .
How this analysis has moved
The call has held across 6 reviews.
Sep 27, 2026 → Oct 29, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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