Evaluating LMT Stock's Actual Performance

Aerospace titan Lockheed Martin (NYSE: LMT) is one of the largest defense contractors in the world, with a market cap of more than $100 billion and annual revenue of $74 billion in 2024. Clearly, the company is doing something right... but is it paying off for its investors?

If you haven't been paying attention, Lockheed's recent stock performance might surprise you. Here's how shareholders of this legendary company have fared in recent years.

One-year performance: Hit the eject button

The past year has not been good for Lockheed Martin. Its share price started sinking in December 2024 and it hasn't gotten back above water since. Currently, shares are down 13.7% over the past year, almost a mirror image of the S&P 500, which is up 13.1% during that time frame:

The picture doesn't get much better if you factor in reinvestment of Lockheed's dividend, which currently yields a robust 3%. On a total return basis, which includes those dividend reinvestments, shares are still down 11% for the year, while the S&P 500's total return is 14.7%.

But any company can have a bad year. How has Lockheed's three-year performance been?

Three-year performance: Still not off the ground

Lockheed's three-year performance is "better," if you can call it that. Instead of being down 13.7%, shares are down 9.8% over the last three years on an absolute basis. Because total returns compound over longer periods of time, the total three-year return for Lockheed is "only" negative 2.3%... very close to breakeven.

However, as investors, we don't want to just break even, we want market-beating returns, and Lockheed Martin's performance is nowhere even close to beating the market. The S&P 500 has surged 68.1% on an absolute basis over the last three years, and 75.7% on a total return basis, meaning investors who bought shares of Lockheed three years ago are losing to the market by more than 75 percentage points.

Will an additional two years make any difference?

Image source: Getty Images.

Five-year performance and beyond: Flight delays

Not only do two years make no difference, even another decade beyond that makes no difference: Lockheed Martin's shares have lost to the market over the last five- and 10-year periods. In fact, you would have had to have bought Lockheed shares in 2013 or before to be beating the market right now.

It would be easy to dismiss Lockheed as a chronic underperformer and leave it at that, but this is actually a fairly recent development for the stock. Lockheed's shares have roughly tracked or outperformed the market on a total return basis for much of the last 20 years. It was only with the stock's 30% slide in late 2024 that its long-term returns dropped significantly below the market's. It's also a good reminder that no matter how well-known or how large a company is, its shareholders should still check on it regularly to make sure it's still on track for outperformance.

John Bromels has no position in any of the stocks mentioned. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.