Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Lockheed Martin Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.5% to 2.2% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 79, DPO 13, DIO 19). At a 8.7% WACC with mid-year discounting, the terminal value (84% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 19.5x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $707.67 per share, suggesting LMT is fairly valued by 12.8% at the current price of $627.09.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 7,646 | 8,032 | 8,394 | 8,401 | 8,583 | 8,798 |
| (−) Net Interest | 965 | 1,014 | 1,060 | 1,061 | 1,084 | 1,111 |
| (+) D&A | 1,643 | 1,715 | 1,776 | 1,851 | 1,927 | 1,975 |
| EBITDA | 10,255 | 10,761 | 11,229 | 11,313 | 11,593 | 11,883 |
| (−) Tax | 1,141 | 1,198 | 1,252 | 1,253 | 1,280 | — |
| (−) CapEx | 1,880 | 1,975 | 2,064 | 2,066 | 2,110 | — |
| (−) ΔWC | 1,490 | 922 | 865 | 18 | 435 | — |
| Free Cash Flow (FCF) | 5,745 | 6,666 | 7,049 | 7,975 | 7,768 | — |
| Peers' EBITDA Multiple | 19.5x | |||||
| Terminal Value | 232,079 | |||||
| WACC / Discount Rate | 8.65% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 5,511 | 5,886 | 5,728 | 5,965 | 5,347 | 153,255 |
| Enterprise Value | 181,691 | |||||
| Projection Period | 28,437 | 15.7% | ||||
| Terminal Value | 153,255 | 84.3% | ||||
| (−) Current Net Debt | 17,579 | |||||
| Equity Value | 164,112 | |||||
| (÷) Outstanding Shares | 232M | |||||
| Fair Price | $708 | +12.9% | ||||
| WACC \ EV/EBITDA Exit Multiple | 15.5x | 17.5x | 19.5x | 21.5x | 23.5x |
|---|---|---|---|---|---|
| 6.7% | $629 | $704 | $778 | $852 | $926 |
| 7.7% | $600 | $671 | $742 | $813 | $884 |
| 8.7% | $572 | $640 | $708 | $775 | $843 |
| 9.7% | $546 | $611 | $675 | $740 | $805 |
| 10.7% | $521 | $583 | $645 | $706 | $768 |
Current price: $627.09. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.