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

Deciding between GE Aerospace (NYSE:GE) and Lockheed Martin Corp (NYSE:LMT) requires choosing between two different paths. One offers commercial aviation growth while the other provides defense stability for your portfolio. Which is the better buy?

GE Aerospace now operates as a focused aerospace leader after the old GE asplit into three companies in 2024, while Lockheed Martin serves as the world's largest defense contractor. Both companies are essential to the global aviation and defense landscape. Investors often compare them to see if commercial recovery or military spending offers better long-term prospects.

The case for GE Aerospace

GE Aerospace focuses on the design and maintenance of aircraft engines for both commercial and military use, managing a massive installed base of more than 44,000 commercial and 26,000 military engines. This expansive global footprint creates a reliable and steady stream of high-margin service revenue among industrial stocks that typically lasts for the entire lifespan of the aircraft. The company recently simplified its corporate structure through a series of spin-offs to focus exclusively on these high-growth propulsion and aviation services segments.

In FY 2025, total revenue reached nearly $46 billion, representing a robust growth rate of approximately 18.5% over the prior fiscal year. Net income for this period was roughly $8.7 billion, resulting in a net margin of about 19% that highlights the profitability of its specialized aerospace engineering. This margin figure indicates how much profit the company keeps for every dollar of sales generated after all costs are considered.

As of its December 2025 balance sheet, the debt-to-equity ratio is nearly 1.1x, a metric that compares total debt to shareholder equity to assess financial leverage. Its so-called current ratio, which gauges the ability to pay short-term obligations with cash and other liquid assets, is approximately 1.0x. Free cash flow was close to $7.3 billion, calculated as cash from operations minus capital expenditures, providing the company with capital for future innovation.

The case for Lockheed Martin

Lockheed Martin remains a dominant force in the global defense market, deriving nearly 72% of its consolidated sales from the U.S. government and its various federal agencies. Customer concentration like this adds a layer of risk to the business, as even minor shifts in federal spending or political priorities can impact major long-term projects. The F-35 Lightning II program remains its most critical and high-profile contract, representing roughly 27% of total consolidated sales for the company in 2025.

In FY 2025, revenue reached roughly $75.1 billion, representing steady growth of approximately 5.7% over the previous fiscal year as global defense needs remained high. Net income for the year was close to $5.0 billion, which indicates a net margin of about 6.7% for the defense giant. This net margin reflects the profit remaining after all operating expenses, taxes, and interest costs have been paid out of total revenue.

As of its December 2025 balance sheet, the debt-to-equity ratio is roughly 3.2x, while the current ratio is approximately 1.1x, showing a stable short-term liquidity position. Free cash flow reached nearly $6.9 billion, providing the company with significant capital for shareholder returns through dividends and share buybacks. It also collaborates through joint ventures, such as the Javelin program partnership with its industry peer RTX Corp (NYSE:RTX).

Risk profile comparison

GE Aerospace faces risks related to the cyclical nature of the commercial aviation industry, as economic downturns can reduce demand for maintenance. The company also competes intensely with RTX and depends on manufacturers like Boeing Co (NYSE:BA) for timely aircraft deliveries. Any production delays from these partners can directly hurt its engine sales.

Lockheed Martin is heavily dependent on U.S. government appropriations and faces a $4.25 billion federal lawsuit filed in March 2026 alleging intellectual property misappropriation. Supply chain issues for critical components like semiconductors or rare earth minerals pose a significant risk to production. The company also competes for defense contracts against major players like Northrop Grumman Corp (NYSE:NOC) and General Dynamics Corp (NYSE:GD).

Valuation comparison

Lockheed Martin offers a much lower entry point for investors based on its Forward P/E, while GE Aerospace trades at a significant premium. This ratio compares the stock price to future earnings estimates to determine if a stock is overvalued.

The P/S ratio measures a company's market value against its sales over the past twelve months.

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.

GE Aerospace is the market leader in aircraft engines, boasting the most installed engines on planes. The company has been focusing on increasing productivity and improving its supply chain by working closely with suppliers. These efforts have meaningfully improved the availability of components for GE Aerospace, helping it meet demand and increasing sales and margins.

Business continues to be good. Management expects growth from recent awards to produce engines for the new F-47 jet from Boeing, as well as a $1.4 billion award from the U.S. Marines. It also received commercial airline awards from United Airlines Holdings Inc. (NASDAQ:UAL), American Airlines Group Inc. (NYSE:AA), and Delta Air Lines Inc. (NYSE:DAL), totaling over $1 billion.

Revenue for the current year, fiscal 2026, is expected to grow more than 18% to $52.3 billion, though net income is likely to lag that pace, growing 5% to $9.1 billion.

Both are stalwart stocks of the American aerospace industry and a good addition to most portfolios. To choose between them, give the nod to GE Aerospace's double-digit revenue growth this year, which signals a business firing on all cylinders.

Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing, GE Aerospace, Lockheed Martin, and RTX. The Motley Fool recommends Delta Air Lines and Northrop Grumman. The Motley Fool has a disclosure policy.