Lockheed Martin (LMT) Could Be 14% Undervalued Following Its $53.9b PAC 3 Deal

Lockheed Martin (LMT) stock is back in focus after the U.S. government awarded the company a seven year undefinitized contract modification worth up to US$53.86 billion for PAC-3 Missile Segment Enhancement interceptors.

See our latest analysis for Lockheed Martin.

The PAC-3 contract news lands on top of a strong run in Lockheed Martin stock, with a 30 day share price return of 11.67% and year to date share price return of 17.23%. Including dividends, the 1 year total shareholder return of 42.15% points to solid recent momentum compared with longer term total shareholder returns over 3 and 5 years.

If this contract has you looking more closely at defense and infrastructure themes, it could be a useful moment to scan for related opportunities through our curated list of 35 power grid technology and infrastructure stocks

Lockheed Martin now trades higher after the PAC-3 contract and upgraded 2026 guidance, which raises a practical question for you: Is today’s price fair for that shift, or does it make more sense to wait?

Most Popular Narrative: 13.5% Undervalued

According to the most followed narrative on Simply Wall St, Lockheed Martin's fair value of $673.88 sits meaningfully above the recent $582.74 close. That gap puts the PAC-3 news flow alongside a valuation story that already assumes sizeable long term cash generation.

Orbit is the long-term bet: space is becoming a must-have layer of modern defense, similar to “roads and rails” for information and targeting.

Lockheed can “industrialize orbit”: not just building satellites, but building them repeatably, on schedule, at controlled cost (like a production system).

Read the complete narrative.

Want to see how this space first thesis actually turns into a $673.88 fair value? The narrative leans heavily on measured revenue growth, firm margins and a future earnings multiple that assumes investors keep paying up for that mix.

Result: Fair Value of $673.88 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this Lockheed Martin narrative could be knocked off course if margins stay pressured while capital needs remain high, or if US government demand softens unexpectedly.

Find out about the key risks to this Lockheed Martin narrative.

Next Steps

This mix of enthusiasm and concern around Lockheed Martin can feel conflicting. It makes sense to review the key details yourself and move quickly to form your own take using the 5 key rewards and 1 important warning sign

Looking for more investment ideas beyond Lockheed Martin?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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