Lockheed Martin Corp. reported its financial results for the fourth quarter and the full year 2025, revealing significant revenue increases but a slight miss on earnings per share (EPS) relative to analyst expectations for the quarter. The company’s solid performance in contracts and backlog, along with strategic capital deployment, contributed to notable market enthusiasm reflected in its stock price reaching a yearly peak.
In the final quarter of 2025, Lockheed Martin's sales climbed to $20.321 billion, up from $18.622 billion recorded during the same period the previous year. This marked a meaningful year-over-year increase in revenue. On the profitability front, net income for the quarter totaled $1.344 billion, translating to $5.80 per diluted share. This was a considerable improvement relative to net earnings of $527 million, or $2.22 per share, in the prior-year quarter.
Despite the top-line growth, the company slightly fell short of meeting Wall Street’s EPS expectations, which stood at $5.86. However, it surpassed revenue projections that were estimated at $19.849 billion. Operating cash flow for the quarter increased sharply to $3.219 billion, more than tripling from $1.023 billion a year earlier, while free cash flow was reported at $2.756 billion, significantly improved from $441 million during the comparable 2024 quarter. This robust cash flow included an $860 million pension contribution made during the period.
By segment, Aeronautics posted a 6% increase in sales to $8.524 billion, with an operating profit of $782 million yielding a 9.2% operating margin. The Missiles and Fire Control division demonstrated impressive growth, with revenues jumping 18% to $4.020 billion, an operating profit of $535 million, and an operating margin of 13.3%.
Rotary and Mission Systems reported an 8% rise in sales, reaching $4.616 billion, accompanied by an operating profit of $468 million, amounting to a 10.1% margin. The Space segment similarly saw an 8% sales increase to $3.161 billion; operating profit for this division was $273 million, with an 8.6% margin.
Turning to full-year figures, Lockheed's revenue grew 6% to $75.048 billion, up from $71.043 billion in 2024. Net income for the year was $5.017 billion, or $21.49 per diluted share, compared with $5.336 billion, or $22.31 per share, a year prior. The full year included a one-time non-operational charge of $479 million recorded in the fourth quarter, linked to a pension obligation transfer completed in December 2025. After-tax, this charge was $377 million, equating to a $1.63 per share impact.
Yearly operating cash flow totaled $8.557 billion, outpacing $6.972 billion in 2024, while free cash flow increased to $6.908 billion from $5.287 billion. Management attributed the cash flow improvement primarily to favorable working-capital movements and reduced tax payments resulting from the effects of the One Big Beautiful Bill Act, referred to as the Tax Act.
At year-end, Lockheed Martin’s backlog reached a record $193.622 billion, up from $176.040 billion at the end of 2024, underscoring its extensive order book. During 2025, the company delivered 191 F-35 fighter jets and 90 government helicopters.
Chairman, President, and CEO Jim Taiclet highlighted 2025 as "a year of unprecedented demand for Lockheed Martin capabilities," emphasizing the company’s strong sales growth, substantial backlog, and robust free cash flow generation. He reaffirmed commitment to providing reliable defense capabilities to the U.S. and allied militaries while delivering shareholder value.
Capital allocation for the year included $1.6 billion invested in capital expenditures, $2.0 billion spent on independent research and development, $3.1 billion returned to shareholders via dividends, and $3.0 billion utilized in the repurchase of 6.6 million shares. The company held $4.121 billion in cash and equivalents at the end of 2025, alongside net long-term debt of $20.532 billion.
Looking forward, Lockheed Martin provided guidance for 2026, forecasting sales between $77.5 billion and $80.0 billion. The projected diluted GAAP EPS range is $29.35 to $30.25, slightly above analyst consensus of $29.14 per share. The firm anticipates free cash flow between $6.5 billion and $6.8 billion. However, the outlook explicitly excludes potential financial impacts from any government shutdowns or new Executive Orders issued by the Administration.
In a strategic development, Lockheed Martin announced a framework agreement with the Department of War to expand production of Terminal High Altitude Area Defense (THAAD) interceptors. This agreement aims to increase annual production from 96 to 400 interceptors over the next seven years. This follows a recent contract to accelerate production of PAC-3 MSE interceptors. The company will establish a Munitions Acceleration Center in Camden, Arkansas, to support THAAD, PAC-3, and other related capabilities.
Investor reaction was positive following the report. Lockheed Martin shares surged 7.65% to $642.99 during trading Thursday, reaching a new 52-week high, according to market data providers. This price action reflects investor confidence in the company’s durable order backlog, broad-based segment growth, and solid capital structure.