Lockheed Martin vs. Northrop Grumman: Comparing Revenue Trends

Key Points

• Lockheed Martin consistently maintains a larger baseline of revenue than Northrop Grumman.

• Both companies display a quarter-over-quarter spike in the fourth quarter followed by a sequential decrease in the first quarter.

• Investors should watch whether the revenue gap between the two companies begins to widen or narrow in upcoming quarters.

• 10 stocks we like better than Lockheed Martin ›

Lockheed Martin: Scaling Defense Production

Lockheed Martin (NYSE:LMT) primarily generates revenue by researching, designing, and manufacturing advanced aerospace and defense systems for the U.S. government.

It recently signed a framework agreement to quadruple the production capacity of specific defense interceptors.

Northrop Grumman: Advancing Aircraft Programs

Northrop Grumman (NYSE:NOC) operates globally by developing and producing advanced aircraft, weapons, and mission systems.

It reached an agreement to increase bomber production capacity by 25% while also disclosing an anomaly-related launch charge.

Why Revenue Matters for Retail Investors

Revenue here refers to the data provider's standardized income statement revenue line item, representing the total money brought in from sales, to help investors measure a company's operational scale.

Quarterly Revenue for Lockheed Martin and Northrop Grumman

Data source: Company filings.

Foolish Take

Lockheed Martin and Northrop Grumman are two of the best-known and most significant defense stocks around. Over the last two years, each company has grown its trailing 12-month revenue by the mid-single digits. Lockheed’s revenue has increased by about 5.7%, and Northrop’s revenue has increased by about 4.0%. For investors pondering an investment in the defense or aerospace sector, both stocks are worthy of consideration.

Let’s start with Lockheed. It is the larger of the two, with a market cap of roughly $117 billion as of this writing. It has a price-to-earnings (P/E) ratio of 25x and a dividend yield of 2.7%. Its key products include the F-35 stealth fighter, the PAC-3 missile defense system, the C-130 Hercules transport aircraft, and the Black Hawk helicopter.

Turning to Northrop, its market cap is about $78 billion as of this writing. Its dividend yield is 1.7%, and its P/E ratio is 17x. Some of Northrop’s key programs include the B-21 stealth bomber, the Sentinel intercontinental ballistic missile, and space systems, including the NASA Artemis mission.

Value-focused investors may prefer Northrop, given its more affordable valuation, while those focused squarely on income may favor Lockheed, given its higher dividend yield.

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Jake Lerch has positions in Lockheed Martin. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.