LMT: The Margin Story Repeats — And Now It's Two Quarters
Lockheed Martin reported Q1 2026 EPS of $6.44 on April 23 — a $0.33 miss against the $6.77 consensus. Revenue was $18.0 billion, dead flat year-over-year. Free cash flow swung from +$955 million in Q1 2025 to negative $291 million in Q1 2026. Net earnings dropped from $1.7 billion to $1.5 billion. The stock closed Friday April 24 at $513.45 — down 17.7% in 30 days, and down roughly 18% from the $627.43 print this article called out before the quarter. The original Q2 2025 thesis on this page was a single-quarter argument: $1.46 EPS on a 4.04% gross margin print looked like an outlier, but the 29x trailing multiple priced in execution that wasn't there. April 23 stopped that being a one-quarter story. Every operating segment compressed margin year-over-year — Aeronautics 8.9% (-130bp), MFC 13.7% (-10bp), RMS 10.6% (-140bp), Space 8.2% (-360bp). Three of four are now sub-11%. Two are sub-9%. What's changed since the original write-up isn't just a worse data point. The macro overlay has hardened. Brent is at $103.40 with Bessent's enforcement framework live, the FY2026 NDAA reset acquisition thresholds in December 2025, and China's rare-earth export controls — a direct F-35 supply-chain input — are now a counted item on the risk side, not a tail risk. The defense-spending tailwind is real. The question this article is now built around is whether LMT's program-execution machinery can convert it into earnings before the multiple gets repriced for what Q1 2026 actually showed.