Question 1

Why did Lockheed Martin's Q2 2025 EPS collapse to $1.46?

Accepted Answer

Q2 2025 EPS fell to $1.46 from $7.30 in Q1 due to program charges that compressed gross margin to 4.04% — a near 9-percentage-point drop from Q1's 12.93%. These charges, common on large fixed-price defense contracts, reduced net income to $342 million on $18.16 billion of revenue.

Question 2

What is the Greece Achilles Shield deal?

Accepted Answer

Greece signed a €4 billion defense contract with Lockheed Martin for integrated air and missile defense systems, branded the Achilles Shield program. The deal adds to Lockheed's international backlog and reflects broader European NATO rearmament spending increases.

Question 3

Is LMT stock overvalued at 29x earnings?

Accepted Answer

At 29.21x trailing EPS of $21.48, LMT is priced for consistent execution. The concern is that Q2 2025 demonstrated execution is not consistent — one charge-heavy quarter cut EPS by 80% quarter-on-quarter. The 16.62x price-to-book ratio leaves minimal margin of safety if earnings power deteriorates.

Question 4

What is Lockheed Martin's debt situation?

Accepted Answer

Debt-to-equity is 3.23 as of Q4 2025, which is high but typical for defense primes. Interest coverage of 8.04x provides adequate buffer. Free cash flow generation in Q3 ($14.43/share) and Q4 ($11.94/share) is strong, though Q2 FCF turned negative at -$0.64/share during the margin collapse.

Question 5

When does Lockheed Martin report next earnings?

Accepted Answer

Next earnings are scheduled for April 21, 2026. Investors will focus on Q1 2026 gross margin as a confirmation that the Q2 2025 charge cycle was isolated, and on initial guidance for the Achilles Shield program margin profile.

Quarter	Revenue	Net Income	EPS
2025-12-31	$20.33B	$1.34B	$5.82
2025-09-28	$18.61B	$1.62B	$6.98
2025-06-29	$18.16B	$342M	$1.46
2025-03-30	$17.96B	$1.71B	$7.30

Lockheed Martin Corporation

Price History (1 Year)

AI Analysis

LMT: Q2 Margin Collapse Beneath the Boom

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