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

Aerospace and defense remains a cornerstone of industrial portfolios, but should you favor commercial growth or military stability? Deciding between GE Aerospace (NYSE:GE) and Lockheed Martin (NYSE:LMT) depends on your specific goals.

GE Aerospace operates as a focused aerospace powerhouse, powering both commercial airliners and military jets. Lockheed Martin serves as the premier global defense contractor, specializing in advanced fighter planes and missile systems. While both operate in the same broader industry, their growth drivers and customer bases create two distinct investment propositions.

The case for GE Aerospace

GE Aerospace operates as a specialized aviation business, distinguishing it from many broader defense stocks that maintain heavy exposure to land and sea systems. Its strategy centers on its massive installed base of more than 44,000 commercial and 26,000 military aircraft engines. This fleet generates high-margin, recurring revenue through services and propulsion systems provided to airlines and government agencies worldwide. In its latest annual report, filed for FY 2025, the company highlighted its focus on scaling production to meet rising demand for more efficient engine technology.

The financial results for FY 2025 show significant momentum as a stand-alone aerospace entity. Revenue reached nearly $45.9 billion, representing a growth of roughly 18.5% compared to the prior year. Net income for the period was close to $8.7 billion, which produced a healthy net margin of approximately 19%. This growth reflects a strong recovery in the commercial aviation sector and higher utilization of existing aircraft fleets requiring engine maintenance.

As of its December 2025 balance sheet, the debt-to-equity ratio is approximately 1.1x. This ratio compares total debt to shareholder equity to measure financial leverage. The current ratio is roughly 1.0x, indicating its ability to cover short-term liabilities. Free cash flow for the period reached nearly $7.3 billion, which is the cash remaining from operations after subtracting capital expenditures. This cash generation supports ongoing research and development for next-generation propulsion systems.

The case for Lockheed Martin

Lockheed Martin is a diversified defense leader organized around four key segments, including Aeronautics and Space. According to its latest annual report, filed for fiscal year 2025, the U.S. Government is its primary customer, accounting for nearly 72% of consolidated sales. Customer concentration like this adds a layer of risk to the business. The F-35 Lightning II program remains its most critical contract, contributing approximately 27% of total sales. The company recently expanded its capacity through a partnership with Avio to boost solid rocket motor production.

In FY 2025, revenue reached nearly $75.1 billion, representing a growth of roughly 5.7% over the previous year. Net income for the fiscal period was close to $5.0 billion, resulting in a net margin of approximately 6.7%. While its growth rate is more moderate than its peer, its revenue is backed by a massive backlog of government orders that provides long-term visibility. This stability is a hallmark of the defense sector where multi-year contracts dictate the financial trajectory.

As of its December 2025 balance sheet, the debt-to-equity ratio is approximately 3.2x, indicating that total liabilities exceed shareholder equity. The current ratio is nearly 1.1x, suggesting the company can meet its near-term financial obligations. Free cash flow for the year reached close to $6.9 billion. This metric represents the cash generated from operations minus capital expenditures, allowing the company to fund dividends and shareholder buybacks even during periods of heavy research investment.

Risk profile comparison

GE Aerospace faces competitive pressure from engine manufacturers such as RTX (NYSE:RTX). While the commercial aviation market remains strong, any downturn in passenger traffic could reduce demand for new engines and services. Additionally, the company must manage production hurdles for its next-generation engines. A slowdown in delivery rates from aircraft manufacturers like Boeing (NYSE:BA) could also delay revenue recognition for installed systems.

Lockheed Martin depends heavily on U.S. Government defense spending, which is subject to budgetary uncertainty or shifts in Department of Defense priorities. The company faces a $4.25 billion intellectual property lawsuit filed by SDR Group in March 2026. Furthermore, supply chain risks for critical components like semiconductors remain a concern. Competitive pressure comes from peers like Northrop Grumman (NYSE:NOC) and General Dynamics (NYSE:GD).

Valuation comparison

Lockheed Martin trades at a significant discount to GE Aerospace on both earnings and sales multiples, reflecting its more mature growth profile.

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

Which stock would I buy in 2026?

I'd go with GE Aerospace. The commercial aviation boom that followed the pandemic recovery is still underway, and GE is sitting at the center of it, with a services business that continues to generate more cash than most investors expected. In Q2 2026, the company posted its fifth consecutive quarter of at least 20% revenue growth, free cash flow jumped 43% year over year, and management raised full-year guidance across every metric. Commercial aviation services are running at record levels, engine deliveries are accelerating, and a backlog exceeding $210 billion gives the business exceptional forward visibility.

Lockheed Martin is a stock that could age well in a long-term portfolio. In Q2 2026, Lockheed delivered record sales, a record backlog, and free cash flow that reversed sharply from a year earlier. The dividend is reliable, and global defense spending shows no sign of slowing down. For investors who value steady, predictable returns from a business tied directly to national security priorities, it is hard to find better.

Both companies are firing on all fronts. But if you're looking for a business that is growing quickly and generating serious cash at the same time, GE Aerospace is the more exciting place to be right now.

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