Boeing vs. Lockheed Martin: Which Aerospace Stock Is a Better Buy in 2026?

Choosing between Boeing Co (NYSE:BA) and Lockheed Martin Corp (NYSE:LMT) involves weighing a high-growth turnaround story against a steady, reliable defense incumbent in an increasingly complex global security environment.

Boeing dominates the civilian skies while maintaining a massive defense presence, whereas Lockheed Martin is a specialized titan of defense technology. Both companies play critical roles in national security and global infrastructure, making them frequent candidates for comparison.

The case for Boeing

Boeing operates as a massive global aerospace entity that builds commercial airplanes, defense systems, and space technologies. The company sells its products to commercial airlines and government agencies in over 150 countries. According to its latest annual report, filed for 2025, the company relies heavily on commercial airlines and also maintains deep ties with the U.S. Department of Defense and NASA. Customer concentration like this adds a layer of risk to the business, particularly when airline acceptance of new aircraft fluctuates.

In FY 2025, revenue reached approximately $89.5 billion, a 34.5% increase from the prior year. The company reported net income of roughly $2.2 billion for the period. This resulted in a net margin of about 2.5%, a notable improvement from the negative margin reported in the previous fiscal year.

As of its December 2025 balance sheet, the debt-to-equity ratio was nearly 10x, indicating that total liabilities are 10 times shareholder equity. The so-called current ratio, which measures the ability to pay short-term obligations with short-term assets, was roughly 1.1x. Free cash flow, calculated as cash from operations minus capital expenditures, was approximately negative $1.9 billion for the fiscal year. Note that stock-based compensation (SBC) accounted for roughly 40% of operating cash flow, thereby inflating reported cash generation, since SBC is a non-cash expense added back in the cash flow statement. Investors often look to the company as a cornerstone among defense stocks because of its dual exposure to civilian and military markets.

The case for Lockheed Martin

Lockheed Martin is a pure-play defense technology company organized into segments for aeronautics, missiles, and space. Its primary customer is the U.S. government, which accounted for roughly 72% of consolidated sales in FY 2025. The F-35 program remains its most vital asset, representing approximately 27% of its total revenue. The company also serves many international allies through foreign military sales, providing a specialized focus that differs from Boeing's commercial-heavy mix.

In FY 2025, revenue reached approximately $75.1 billion, representing growth of 5.7% over the previous year. This resulted in net income of just over $5 billion. The F-35 program remains the primary revenue driver, contributing nearly 27% of total sales and supporting international partnerships. While revenue growth is slower than its competitor, the company has maintained a consistent history of profitability. This stability is driven by the long-term nature of defense contracts and the essential nature of its aeronautics programs.

As of its December 2025 balance sheet, the debt-to-equity ratio was roughly 3.2x. This ratio measures total debt relative to shareholders' equity, indicating how much a company relies on borrowed money. The so-called current ratio was roughly 1.1x, suggesting a tight but sufficient liquidity position. Free cash flow was a healthy $6.9 billion. This strong cash generation allows the company to support its dividend and share repurchase programs, which are common priorities for established industrial giants.

Risk profile comparison

Boeing faces risks related to production and certification delays for its 777X, 737, and 787 programs. These hurdles with the FAA could lead to further financial losses or order cancellations. The company is also integrating Spirit AeroSystems, a move that carries execution risks and potential unforeseen expenses. Furthermore, it faces intense competition from Airbus (OTC:EADSF) in the commercial aircraft market, which could impact its future market share.

Lockheed Martin is highly susceptible to changes in U.S. government defense spending and potential budget cuts. A $4.25 billion federal lawsuit regarding proprietary business models also poses a significant financial and legal risk. The company depends on a complex supply chain that relies on imported rare earth minerals, making it vulnerable to trade restrictions. It competes for major contracts against other large defense firms like General Dynamics Corp(NYSE:GD), Northrop Grumman Corp (NYSE:NOC), and RTX Corp (NYSE:RTX).

Valuation comparison

Lockheed Martin appears to be the more conservatively valued option based on future earnings estimates, while Boeing continues to trade at a premium during its recovery.

Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?

Lockheed Martin Corp is a core company in the middle of one of the biggest priorities in the U.S.: aerospace and defense. In particular, the F-35 fighter program remains a pillar of Lockheed's business, with the Defense Department planning to continue to buy the jet into the 2040s. Having more than a quarter of revenue essentially guaranteed for 15 years or more is unheard of and quite appealing to a long-term investor. Lockheed Martin's sales are anticipated to grow about 5% to $79.1 billion in the current fiscal year.

Boeing is still working to recover from safety and supply chain issues. While revenue will rise about 9% to $97.7 billion this year, the company's net income will fall dramatically to around $85 million, according to consensus Wall Street analyst forecasts, hence its very high forward P/E ratio.

But don't count Boeing out. It is among the largest aerospace and defense companies, giving it excellent long-term prospects due to its leading position in the growing commercial aerospace industry. In the first quarter of its current fiscal year, the order backlog rose in the double digits, setting a new record. Backlogs mean future sales are strong and show the industry believes in the business.

In choosing between the two, it is difficult to ignore the value stock look of Lockheed Martin right now, with its lower P/S and forward P/E ratios comnpared to Boeing. For long term investors looking for a key aerospace stock to round out their portfolio, Lockheed Martin is the choice here.

Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing, Lockheed Martin, and RTX. The Motley Fool has a disclosure policy.