Lockheed Martin Corporation (LMT): BCG Matrix [Dec-2025 Updated]

You're looking at Lockheed Martin Corporation's portfolio as of late 2025, and honestly, it's a classic defense giant balancing massive wins against tricky new bets. With a backlog of $179 billion providing a solid floor, we see clear Stars like the F-35 driving growth alongside reliable Cash Cows like the FBM program. Still, the picture isn't perfect; we've got Dogs facing significant losses, like that $1.6 billion charge on a classified program, and Question Marks like the delayed Hypersonics and the F-35 TR-3 software snag that's causing a cash drag. Let's break down exactly where the future cash is coming from and where you need to watch for trouble below.

Background of Lockheed Martin Corporation (LMT)

Lockheed Martin Corporation, the aerospace and defense contractor based in Bethesda, Maryland, operates through four primary business segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS), and Space. This structure forms the core of Lockheed Martin revenue and financial performance 2025, which is projected to land between $73.75 billion and $74.75 billion for the full year.

The company reported strong momentum early in the year, with first quarter of 2025 sales reaching $18.0 billion, a 4% year-over-year increase. By the third quarter of 2025, sales had climbed further to $18.6 billion, and the company announced a record backlog of $179 billion, representing more than two and a half years of sales.

Looking at the segment performance from the first quarter of 2025, Aeronautics posted sales of $7 billion, largely driven by the F-35 fighter jet program. Missiles and Fire Control saw sales of about $3.4 billion, fueled by production ramp-up on tactical and strike missile programs like the Long Range Anti-Ship Missile and Joint Air-to-Surface Standoff Missile.

The Rotary and Mission Systems segment reported first quarter 2025 sales of $4.3 billion, benefiting from higher volumes in integrated warfare systems and sensors, as well as Sikorsky helicopter programs. The Space segment experienced a slight dip in Q1 2025 sales to $3.2 billion, attributed to lower volumes on national security space programs.

Financially, Lockheed Martin Corporation returned $1.8 billion to shareholders through dividends and share repurchases in the third quarter of 2025 alone. Furthermore, the board authorized a fourth quarter 2025 dividend of $3.45 per share, marking a 5% increase over the previous quarter.

Lockheed Martin Corporation (LMT) - BCG Matrix: Stars

You're looking at the core growth engines for Lockheed Martin Corporation as of late 2025, the businesses that dominate their respective markets and are currently operating in high-growth environments. These are the Stars, demanding significant investment to maintain their lead, but promising the future Cash Cow status if market growth moderates while share is held.

The overall financial health supports this investment, with Lockheed Martin Corporation reporting total Q3 2025 sales of $18.6 billion, up 9% year-over-year, and achieving a record backlog of $179 billion as of September 28, 2025. This backlog represents more than two and a half years of sales. The company raised its full-year 2025 sales outlook to a range between $74.25 billion and $74.75 billion. Free cash flow for Q3 2025 was $3.3 billion. The quarterly dividend was increased by 5% to $3.45 per share. It's clear that investment is being prioritized in these high-momentum areas.

Here is a look at the key business units that fit the Star profile based on recent performance:

The F-35 Lightning II Program is the quintessential Star. Its high market share in the global fighter market, coupled with ongoing modernization and the sheer volume of production and sustainment work, drives significant top-line growth. The Aeronautics segment sales growth of 12% in Q3 2025 was directly attributable to this platform. The long-term revenue stream is secured by the global fleet, which requires continuous support.

Tactical and Strike Missiles is another clear Star, fueled by geopolitical demand. The 14% sales increase in the Missiles and Fire Control (MFC) segment, reaching $3.62 billion in Q3, shows the market is expanding rapidly for these systems. The focus here is on production scale, with plans for a 20% increase in PAC-3 production for 2025, following a 30% expansion in 2024. This high-growth phase consumes cash but solidifies market leadership.

Integrated Air and Missile Defense systems like THAAD and Aegis are experiencing robust demand in a critical geopolitical market. The delivery of the eighth U.S. THAAD battery in June 2025 underscores active deployment and modernization. Furthermore, a recent contract modification for THAAD interceptor production added $2.1 billion to existing work, pushing the total contract value for that effort past $10.4 billion. This area is a leader in a market where growth is currently non-negotiable.

F-35 Sustainment and Modernization represents the long-term value proposition within the Star category. While production drives immediate sales, the services revenue stream tied to the global fleet provides high-margin stability. The Aeronautics segment backlog alone stands at $47.51 billion as of September 28, 2025. You need to keep investing heavily here to ensure that when the production growth rate inevitably slows, the service contracts step in to transition this into a Cash Cow.

You should focus on capital allocation to:

• Accelerate F-35 production rate to meet customer delivery schedules.
• Expand the supplier base for PAC-3 and JASSM/LRASM to sustain the 20% planned 2025 production increase.
• Ensure capital expenditures support the modernization efforts on THAAD systems.

If onboarding takes 14+ days, churn risk rises-in this context, if production scaling lags demand, market share could be threatened by competitors.

Lockheed Martin Corporation (LMT) - BCG Matrix: Cash Cows

Cash Cows for Lockheed Martin Corporation are established business units or platforms operating in mature defense markets where the company maintains a high market share, providing consistent, high-margin cash flow to fund other strategic areas. These units require minimal growth investment but benefit from infrastructure efficiency improvements.

C-130 Hercules Transport Aircraft

The C-130 Hercules platform represents a classic cash cow, supported by its long service life and global ubiquity. While new production rates are adjusting, the aftermarket and sustainment revenue streams are highly reliable. The platform's longevity was recently reinforced in June 2025 when rigorous wing structure testing confirmed a nearly 40% increase in its wing lifespan, promising substantial reductions in long-term maintenance costs for global operators. Current annual output for the C-130J Super Hercules is in the process of being reduced from 24 to 20 units, partly because the U.S. Air Force is nearing completion of its purchases for National Guard and Reserve units. Still, the company sees production extending well into the latter part of the next decade.

Fleet Ballistic Missile (FBM) Program

The FBM program, centered on the Trident II D5 missile, is the backbone of the U.S. sea-based deterrence, ensuring stable, long-term government funding. This program is essential and has multi-decade revenue visibility. In January 2025, the U.S. Navy awarded a modification worth $383 million for the development of the Trident II D5 Life Extension 2 (D5LE2), designed to keep the system credible through 2084. More recently, in October 2025, Lockheed Martin secured a $647 million contract modification for production and support, with options that could raise the value to about $746 million, covering work through September 30, 2030. The agreement immediately obligated roughly $120 million of fiscal 2025 Navy procurement funds.

Rotary and Mission Systems (RMS) Core

The RMS segment includes mature platforms that contribute steady revenue. For the third quarter of 2025, this segment reported sales of $4.4 billion. Operating profit for RMS increased 5% compared to the same period in 2024, primarily due to a favorable contract mix at Sikorsky. However, the segment's full-year 2025 forecast was lowered by $500 million due to slower production ramps at Sikorsky, indicating the mature nature of some core production lines.

Dividends and Share Repurchases

The strong cash generation from these mature businesses directly supports shareholder returns. Lockheed Martin Corporation reaffirmed its full-year 2025 Free Cash Flow guidance to range between $6.6 billion and $6.8 billion. This robust cash position supported key capital deployment actions announced in October 2025:

• The board authorized a fourth quarter 2025 dividend payment of $3.45 per share, representing a 5% increase, or $0.15 per share, over the prior quarter.
• This marks the company's 23rd consecutive year of dividend increases.
• The share repurchase program was expanded by an additional $2.0 billion, bringing the total authorization for future repurchases to approximately $9.1 billion.
• In Q3 2025 alone, the company returned $1.8 billion to shareholders through dividends and share repurchases.

The company's overall financial health is underpinned by a record backlog of $179 billion as of Q3 2025, representing more than two years of sales.

You should monitor the execution efficiency within RMS, as the segment's forecast was lowered by $500 million for the year, which is a key area to watch for maintaining cash cow stability.

Finance: draft 13-week cash view by Friday.

Lockheed Martin Corporation (LMT) - BCG Matrix: Dogs

You're looking at the units within Lockheed Martin Corporation (LMT) that are tying up capital without delivering commensurate returns, which is what we call Dogs in the BCG framework. These are low-growth, low-share businesses that management needs to seriously consider minimizing or divesting, because expensive turnarounds rarely work in this space.

The financial evidence from the second quarter of 2025 clearly points to significant pain points in specific legacy and development areas. The total pre-tax losses on programs for Q2 2025 hit a staggering $1.6 billion, which caused net income to plunge to just $342 million, down from $1.64 billion the year prior. This single quarter's charge impacted earnings per share by $5.83.

Here's a quick breakdown of the major financial hits that characterize these Dog segments:

The pressure on profitability is evident when you look at the margins. Lockheed Martin's net profit margin compressed to 5.7% in Q2 2025, a clear contraction from 9.4% in the prior year, largely due to these persistent cost overruns in major legacy programs.

Classified Aeronautics Program

The most significant drain was tied to a classified program within Aeronautics. This single initiative accounted for a $950 million loss in Q2 2025 due to continued design, integration, and test challenges that cost more than previously estimated. To be fair, this wasn't the first time; the company booked a $555 million loss on this same classified program in the fourth quarter of 2024. This suggests deep-seated execution issues that are consuming cash flow.

Legacy Fixed-Price Programs

The issue isn't isolated to classified work; it's systemic across older, less flexible contracts. These legacy fixed-price agreements, often negotiated before recent inflationary spikes, force Lockheed Martin to absorb cost overruns. The resulting margin compression is a symptom of this contract structure vulnerability.

• Older contracts with unfavorable terms are now facing margin pressure.
• Cost overruns are being absorbed by Lockheed Martin.
• The overall net profit margin fell to 5.7% in Q2 2025.

Sikorsky International Helicopter Programs

The Sikorsky unit also contributed to the Q2 2025 charges, specifically citing restructuring risks in certain international contracts. The total charge linked to international helicopter programs was $570 million, primarily associated with the Canadian government's CH-148 Cyclone maritime helicopters. Furthermore, the Q2 2025 cash flow deterioration was partially attributed to elevated inventory levels at Sikorsky. Still, you have to note the massive $10.855 billion contract secured in September 2025 for up to 99 CH-53K King Stallion helicopters, which shows a path to future volume, even if current international programs are problematic.

Loss of NGAD Contract

The failure to secure the U.S. Air Force's Next Generation Air Dominance (NGAD) contract represents a lost future market share opportunity in a key domain. Boeing was awarded the engineering and manufacturing development contract for the F-47 in March 2025, an initiative expected to exceed $20 billion in its development phase. This loss was a direct financial event for Lockheed Martin, resulting in a $66 million write-off of fixed assets in Q2 2025.

• Boeing selected for the F-47 (NGAD) development contract in March 2025.
• The development phase value was expected to exceed $20 billion.
• Lockheed Martin recorded a $66 million asset write-off due to the decision.

Finance: draft 13-week cash view by Friday.

Lockheed Martin Corporation (LMT) - BCG Matrix: Question Marks

You're analyzing the high-growth, low-market-share segments of Lockheed Martin Corporation (LMT), the classic Question Marks that demand cash now for a potential future Star position. These are the bets where market adoption is still uncertain, but the growth trajectory of the underlying market-in this case, advanced military capabilities-is undeniable.

Hypersonic Weapons (CPS/Dark Eagle)

The Conventional Prompt Strike (CPS) and Long-Range Hypersonic Weapon (LRHW), formally designated Dark Eagle in April 2025, represent a high-growth market where Lockheed Martin is still building share. The Navy's CPS effort saw a recent contract modification worth $1 billion to continue support, with work scheduled through August 31, 2028. For the Army's Dark Eagle, the FY2025 budget includes a request for $538 million for development (RDT&E) and $744.2 million for procurement of eight All-Up Rounds and support equipment. However, the Navy's procurement of CPS missiles has been deferred, with plans now showing a purchase of six rounds in FY2026, down from earlier plans. The Navy also requested $903.9 million for CPS RDT&E in FY2025. The first successful CPS test from Cape Canaveral occurred on May 2, 2025.

Here's a quick look at the requested funding and procurement shifts for FY2025:

Next Generation Interceptor (NGI)

The $18 billion Next Generation Interceptor (NGI) program, where Lockheed Martin is the selected developer, is facing significant schedule pressure. The Missile Defense Agency (MDA) confirmed an approximate 18-month schedule slip this year, primarily due to issues with the new solid rocket motor development. The initial operational capability was previously targeted for the fourth quarter of fiscal 2028. The MDA selected Lockheed Martin and its partners in April 2024, accepting some risk to accelerate delivery.

• Program Total Estimated Value: $18 billion
• Current Schedule Delay: Approximately 18 months
• Primary Risk Driver: New solid rocket motor development
• Previous IOC Target: Q4 Fiscal 2028

Technology Refresh-3 (TR-3) F-35 Upgrade

The TR-3 upgrade, central to the F-35 Block 4 modernization, is a major cash consumer due to delays. The Pentagon is withholding approximately $5 million in payments for each jet delivered without the combat-ready software. For context, Lockheed Martin delivered 110 aircraft in 2024, all late by an average of 238 days. While some partial payment relief occurred earlier in 2025-about $1.2 million per jet-the bulk remains tied up. Lockheed Martin expected to start recouping $300 million to $400 million more in 2025 as more jets clear milestones. The Block 4 effort, which TR-3 anchors, is at least $6 billion over budget as of September 2025. The TR-3 software itself has slipped to 2026, putting it three years behind schedule. To manage this, the Pentagon scaled back its FY2026 order from an expected 75 units to just 47.

SR-72/Skunk Works Advanced Concepts

Projects emerging from Skunk Works, like the rumored SR-72 hypersonic jet, are pure high-risk, high-reward R&D. The SR-72 is envisioned to reach speeds over Mach 5, potentially 3,700 mph. While a prototype flight was rumored for 2025 based on older timelines, service entry is now projected into the 2030s. The development is supported by significant infrastructure investment, including Building 648, an intelligent flexible factory completed in 2021 designed for rapid production setup. Furthermore, between February 2018 and September 2023, Lockheed Martin expanded its advanced development unit by 75%, hiring over 2,300 personnel to support these future concepts.

You need to watch the pace of technology maturation versus the cash burn here. It's a long runway for revenue.

• Rumored Top Speed: Mach 6, or approx. 3,700 mph
• Potential Service Entry: Into the 2030s
• Factory Completion: Building 648 finished in 2021
• Advanced Development Headcount Growth: 75% increase (2018-2023)

Finance: draft 13-week cash view by Friday.