GE Aerospace or Lockheed Martin: Which Aerospace and Defense Stock Is a Better Buy for 2026?

GE Aerospace (NYSE:GE) focuses on jet engines and aviation systems for commercial and military use. Lockheed Martin (NYSE:LMT) is a diversified defense leader providing mission solutions and advanced weaponry.

Both companies benefit from rising global security concerns and aviation demand, but they differ significantly in their growth trajectories and in how the market values their future earnings. Choosing between GE Aerospace and Lockheed Martin depends largely on whether you prefer commercial aviation momentum or a stable, dividend-paying pure defense play.

The case for GE Aerospace

GE Aerospace designs and manufactures jet and turboprop engines and integrated systems for commercial, military, business, and general aviation aircraft. It serves customers in approximately 120 countries and maintains a strong presence in the global propulsion market.

In FY 2025, revenue reached nearly $45.9 billion, up 18.5% year over year. The company reported net income of approximately $8.7 billion for the same period. The net margin of 19% was a notable improvement from the 16.9% reported in FY 2024.

As of its December 2025 balance sheet, the debt-to-equity ratio was roughly 1.1x, which compares total debt to shareholders’ equity. The current ratio stood at approximately 1.0x, indicating the company has sufficient short-term assets to cover its immediate financial obligations. Free cash flow (FCF) for FY 2025 was close to $7.3 billion, which represents the cash remaining after the business pays for its capital expenditures.

The case for Lockheed Martin

Lockheed Martin is a global titan among defense stocks, focusing on advanced technology and mission solutions. It is heavily dependent on the U.S. government, which accounted for nearly 72% of its 2025 consolidated sales. The F-35 aircraft program alone represents close to 27% of total sales.

For FY 2025, revenue reached nearly $75.1 billion, reflecting 5.7% over the prior year. Net income for the period was close to $5 billion, down about 6% from the previous year. The company achieved a net margin of approximately 6.7%, which was lower than the 7.5% recorded in FY 2024.

As of the December 2025 balance sheet, the debt-to-equity ratio was approximately 3.2x, indicating that total debt was more than triple shareholder equity. The current ratio was close to 1.1x, suggesting the company has slightly more in short-term assets than short-term liabilities. FCF was nearly $6.9 billion, representing the cash remaining after spending on capital equipment.

Risk profile comparison

GE Aerospace faces cyclical risks in the commercial aviation industry. Supply chain constraints and rising raw material costs can also pressure production schedules. Furthermore, the company competes against formidable players like RTX (NYSE:RTX) and Safran for major propulsion contracts.

Lockheed Martin is susceptible to shifts in U.S. government spending priorities and potential budget volatility. The company also faces a $4.25 billion lawsuit filed in March 2026 by SDR Group regarding proprietary technology. Other risks include cybersecurity threats from state-sponsored actors and competition, especially for international contracts, from companies like Northrop Grumman (NYSE:NOC).

Valuation comparison

Lockheed Martin trades at a significant discount compared to GE Aerospace when looking at both Forward P/E and P/S ratio metrics. The Forward P/E compares the stock price to future earnings estimates, while the P/S ratio measures the stock price against company sales.

Sector benchmark uses the SPDR XLI sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?

Following General Electric’s completion of its multi-year spin-off strategy, GE Aerospace is now a pure-play aviation giant. Lockheed Martin, meanwhile, remains the undisputed king of military defense contracting.

Lockheed Martin exited 2025 with a record backlog of $194 billion as demand for its major programs and systems soared. During the U.S. military's January 2026 Operation Absolute Resolve in Venezuela, its F-35 and F-22 fighter jets, RQ-170 stealth drones, and Sikorsky Black Hawk helicopters were all used. The defense giant delivered a record 191 F-35 fighter jets to the U.S. and its allies in 2025.

In June, Lockheed won a massive $35 billion contract from the U.S. government to quadruple the production of its THAAD interceptors. However, the company reported a slightly lower backlog of $186 billion in Q FY 2026 as well as a 13% year-over-year drop in net income for the quarter because of charges booked for production performance and development delays on programs such as the F-16. Lockheed still reaffirmed its full-year guidance of 5% sales growth, 25% operating profit growth, and FCF of $6.5-$6.8 billion.

GE Aerospace’s orders jumped 32% in FY 2025, pushing its backlog to nearly $190 billion. The first quarter of FY 2026 was even bigger, with orders surging 87% and backlog surpassing $210 billion. Because GE has a massive installed base of commercial turbine engines globally, it also generates highly lucrative, recurring, high-margin aftermarket service revenue.

With the global commercial aircraft backlog now nearly 12 years of production, airlines must keep planes flying longer and continue servicing them. It’s a win-win for GE as demand for its aftermarket services booms even as it continues to fulfill airline contracts.

The commercial aviation supercycle is the biggest structural tailwind for GE. And that’s mainly why if I had to choose between the two stocks today, I would buy GE Aerospace.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends GE Aerospace and RTX. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.