President Donald Trump's defense strategy has been making waves with buyback threats and a massive $1.5 trillion budget proposal. But once you tune out the policy noise, the question for investors becomes much more straightforward: which defense stock actually offers the best value if military spending really takes off?
The answer isn't obvious, because Lockheed Martin Corp (LMT), RTX Corp (RTX), and Northrop Grumman Corp (NOC) are priced very differently right now. Let's look at what the numbers are actually saying.
Lockheed Martin: Paying for Predictability
Lockheed Martin carries a market cap around $115 billion with a trailing P/E near 28, according to market data. That sounds rich until you notice the forward P/E drops sharply to approximately 17, suggesting investors expect earnings to grow substantially as future contracts kick in.
The EV/EBITDA ratio of roughly 17.4 positions Lockheed as a steady compounder rather than a bargain-basement opportunity. This isn't deep value territory. It's a stock priced for consistent execution if production ramps materialize as anticipated.
RTX: Premium Quality, Premium Price
RTX sits at the top of the valuation ladder. With a market cap approaching $249 billion, a trailing P/E above 38, and a forward P/E near 28, the market is clearly pricing in optimistic expectations.
Its EV/EBITDA of about 19 reflects confidence in the company's scale and diversified operations, but that lower earnings yield means investors are paying a premium. RTX absolutely benefits if defense spending surges, but there's not much cushion if things don't go exactly to plan.