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Corporate Score 45 Bullish

Defense Sector Divergence: Lockheed Martin and Howmet Aerospace Positioned for Geopolitical Tailwinds

Apr 19, 2026 23:52 UTC
LMT, HWM
Medium term

Lockheed Martin and Howmet Aerospace are capitalizing on heightened global tensions and increased defense spending. While Lockheed offers stability and dividends, Howmet provides high-growth potential in specialized aerospace components.

  • LMT 2025 revenue reached $75 billion with a $194 billion backlog
  • HWM 2025 revenue rose 11% to $8.3 billion with 32% EPS growth
  • LMT offers a 2.2% dividend yield vs HWM's 0.18%
  • HWM trades at a high forward P/E of 54+ compared to LMT's 20.6
  • Proposed 2027 U.S. defense budget target is $1.5 trillion

The ongoing conflict in Iran and shifting U.S. defense priorities are driving significant gains for aerospace and defense contractors. Lockheed Martin (LMT) and Howmet Aerospace (HWM) have both seen share price increases of 21% to 25% year-to-date through mid-April, benefiting from a surge in defense appropriations. The two companies operate at different scales of the supply chain. Lockheed serves as a primary systems integrator for fighter jets and missiles, while Howmet specializes in the mission-critical components, such as turbine blades and fasteners, that power those very systems. This symbiotic relationship is evident in Howmet's role as a supplier for the F-35 Lightning II program. Lockheed reported 2025 revenue of $75 billion, a 6% increase, supported by a massive $194 billion backlog. Despite a 23% dip in EPS due to non-recurring charges, the company is forecasting 2026 revenue between $77.5 billion and $80 billion. A recent $4.7 billion Army contract for precision munitions highlights its role in the current restocking cycle. Howmet is experiencing more aggressive growth, with 2025 revenue rising 11% to $8.3 billion and EPS climbing 32% to $3.71. The company expects 2026 revenue to reach between $9 billion and $9.2 billion. However, this growth comes at a premium, with a forward P/E ratio exceeding 54, compared to Lockheed's 20.6. With the Trump administration proposing a 2027 defense budget of $1.5 trillion, both firms are well-positioned for long-term demand. Investors are currently weighing Lockheed's 2.2% dividend yield and valuation stability against Howmet's rapid expansion in the spare parts and structural components market.

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