Boeing Wins Figher Jet Contract! Should You Buy Boeing Stock Instead of Lockheed Martin?

$Boeing(BA)$ $Lockheed Martin(LMT)$

Boeing recently scored a major win over Lockheed Martin, landing a highly lucrative government contract to design and manufacture the next-generation fighter jets for the U.S. military.

This development made headlines—and understandably so. These kinds of defense contracts can be worth billions of dollars over many years, not just in direct payments, but also in maintenance, upgrades, and follow-on sales. Naturally, many investors might be wondering: Does this contract make Boeing the better stock to buy compared to Lockheed Martin?

On the surface, winning a contract like this is a major positive for Boeing. But when it comes to investing, we need to look beyond the headlines. The best stock to buy isn’t always the one with the biggest headline-grabbing deal. We need to dig deeper into the financials and the fundamentals of each company.

So in this article, I’m going to do exactly that. I’ll walk you through a side-by-side comparison of Boeing and Lockheed Martin, looking at several critical financial metrics that go far beyond this one deal. We’ll examine:

• Revenue growth trends over the past several years

• Cash flow from operations and how each company manages its capital

• Return on invested capital, a key measure of how efficiently each company generates returns for shareholders

• Fixed asset turnover, which tells us how well they’re utilizing their capital-intensive infrastructure

• And we’ll also compare their valuations, both on a forward P/E basis and using my proprietary discounted cash flow (DCF) models

Then, after looking at all that data, I’ll give you my personal take on which of these two aerospace and defense giants is the better long-term investment at today’s prices.

Revenue Growth: A Tale of Two Trajectories

Let’s start by looking at revenue growth, one of the most fundamental metrics in any company analysis. Here, two key trends stand out.

First, Boeing’s revenue growth has been extremely volatile over the past five years. The company has faced a perfect storm of challenges, starting with the global pandemic, which essentially shut down air travel and crushed demand for commercial aircraft. Then came Boeing’s own internal quality control issues, leading to delays, grounding of aircraft, and restrictions from regulators.

By contrast, Lockheed Martin’s revenue growth has been much more stable, reflecting its core role as a defense contractor and the consistent demand for its military products and services. In the most recent quarter, Boeing saw its revenue fall by a dramatic 31%, while Lockheed Martin’s revenue only declined by 1%—a significant difference that speaks to the underlying resilience of each business.

Now, there is a potential silver lining for Boeing. That new fighter jet contract could provide a long-term boost. In addition, both companies are sitting on massive backlogs—hundreds of billions of dollars in signed contracts they simply need to fulfill. The big question is whether Boeing can get its manufacturing operations back on track, which has been its Achilles’ heel over the past several years.

Cash Flow from Operations: Improving, but Still a Struggle

Cash flow from operations tells us how well a company is turning its business activities into real, usable cash. Boeing’s performance here has been rocky.

The company’s CFO recently came out and said that Boeing is expecting continued negative cash flow for several more quarters, although improvements are slowly being made. In the trailing 12-month period, Boeing posted a -18% cash flow from operations figure.

Lockheed Martin, on the other hand, continues to generate positive operating cash flow, with a recent figure of +9.81%. That’s a huge gap and underscores the difference in financial stability between the two companies at this point in time.

Return on Invested Capital (ROIC): Lockheed in the Lead

Next, let’s look at return on invested capital, or ROIC. This measures how effectively a company is using the capital it has available—both from debt and equity—to generate returns. It’s one of the best indicators of business efficiency and long-term value creation.

Lockheed Martin shines here, generating an impressive 20.7% ROIC, which is excellent for a company in a capital-heavy industry.

Boeing, unfortunately, has been in negative ROIC territory for the past five years. Part of that is due to external factors—like the pandemic—and part of it is due to internal mismanagement and execution failures, particularly around manufacturing. To be fair, Boeing’s business model does rely more on cash flow than bottom-line profits due to heavy depreciation and amortization. But even after adjusting for those accounting quirks, Lockheed still comes out well ahead.

Fixed Asset Turnover: Efficiency Matters in Capital-Heavy Industries

Both Boeing and Lockheed Martin operate in capital-intensive industries, requiring large investments in facilities, machinery, and equipment. That makes fixed asset turnover an especially important metric to examine. It tells us how efficiently a company is generating revenue from those capital investments.

Lockheed Martin again leads here with a fixed asset turnover ratio of 8.4, which is impressive for a company of its size and capital structure. Boeing trails with a ratio of 5.7. While that’s still solid, the long-term trend shows Boeing’s efficiency has been slipping, while Lockheed has remained steady.

Valuation: DCF and Forward P/E

Now let’s talk valuation—because even a great company can be a bad investment if the stock is overpriced.

On a forward P/E basis, Lockheed Martin is trading at around 15x earnings, compared to 40x for Boeing. Boeing’s high multiple reflects both investor optimism about a turnaround and the fact that earnings are currently suppressed due to regulatory and operational constraints.

But we can get a clearer picture by using a discounted cash flow model, which attempts to estimate a company’s intrinsic value based on future cash flows.

Here are the results of my proprietary DCF models:

• Boeing’s intrinsic value: $141 per share vs. a current market price of $167

• Lockheed Martin’s intrinsic value: $674 per share vs. a current market price of $449

That’s a major discrepancy. According to my model, Lockheed Martin is trading well below its fair value, while Boeing is overvalued at current prices.

Final Verdict: Which Is the Better Buy?

Taking all of this into account—revenue growth, cash flow, capital efficiency, and valuation—if I had to pick just one of these companies to buy and hold for the next 10+ years, the choice is clear:

Lockheed Martin is the better buy today

While Boeing may recover over time—and winning the fighter jet contract is a step in the right direction—the company still faces serious execution risks. Lockheed Martin, meanwhile, continues to demonstrate financial strength, operational discipline, and consistent returns for shareholders—all while trading at what I believe is a steep discount to its intrinsic value.

If you found this breakdown helpful, make sure to hit the like button and subscribe for more in-depth investing insights.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

@Daily_Discussion @TigerPM @TigerObserver @Tiger_comments @TigerClub