Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2005
- Price to Operating Profit (P/OP) since 2005
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Return on Invested Capital (ROIC)
Lockheed Martin Corp., ROIC calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2025 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The period under review demonstrates fluctuations in Return on Invested Capital (ROIC). Net operating profit after taxes (NOPAT) and invested capital both exhibit variability across the years, influencing the overall ROIC performance.
- ROIC Trend
- ROIC began at 22.51% in 2021, decreased to 21.60% in 2022, and then increased significantly to 25.46% in 2023. A substantial decline was then observed in 2024, with ROIC falling to 18.98%. The final year, 2025, shows a partial recovery to 20.11%.
- NOPAT Analysis
- NOPAT decreased from US$6,442 million in 2021 to US$5,745 million in 2022, representing a decline. It then rebounded to US$6,983 million in 2023, the highest value in the observed period. A decrease to US$5,464 million occurred in 2024, followed by a modest increase to US$6,105 million in 2025.
- Invested Capital Analysis
- Invested capital decreased from US$28,620 million in 2021 to US$26,603 million in 2022. It experienced a slight increase to US$27,427 million in 2023, and then a more substantial increase to US$28,784 million in 2024. The trend continued with further growth to US$30,349 million in 2025.
The largest single-year decline in ROIC occurred between 2023 and 2024. This coincided with a decrease in NOPAT and a concurrent increase in invested capital. While NOPAT recovered somewhat in 2025, the increase in invested capital continued, resulting in a ROIC that remained below the 2023 peak. The interplay between NOPAT and invested capital is the primary driver of the observed ROIC fluctuations.
Decomposition of ROIC
Lockheed Martin Corp., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2025 | = | × | × | ||||
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The period under review demonstrates fluctuations in the components contributing to overall return on invested capital. Operating profit margin, turnover of capital, and the impact of the effective cash tax rate all exhibit distinct trends that collectively influence the observed ROIC performance.
- Operating Profit Margin (OPM)
- The operating profit margin increased from 11.85% in 2021 to 13.04% in 2023, indicating improved operational efficiency or pricing power during that timeframe. However, a subsequent decline is observed, falling to 10.03% in 2024 and further to 9.10% in 2025. This suggests potential pressures on profitability in the later years, possibly due to increased costs or competitive pressures.
- Turnover of Capital (TO)
- The turnover of capital remained relatively stable throughout the period, ranging between 2.34 and 2.48. A slight increase was noted from 2021 to 2022, followed by a leveling off around 2.47 in the subsequent years. This consistency suggests a stable utilization of invested capital to generate revenue.
- Effective Cash Tax Rate Impact (1 – CTR)
- The impact of the effective cash tax rate shows considerable variability. It decreased from 81.11% in 2021 to 75.05% in 2022, then recovered to 79.28% in 2023. A further decrease to 76.67% in 2024 was followed by a substantial increase to 89.41% in 2025. This fluctuation significantly affects after-tax returns, with the higher value in 2025 indicating a greater proportion of operating profit retained after tax payments.
- Return on Invested Capital (ROIC)
- The return on invested capital mirrored the combined effects of the aforementioned factors. ROIC peaked at 25.46% in 2023, coinciding with the highest operating profit margin and a favorable effective cash tax rate impact. A decline to 18.98% in 2024 reflects the decrease in operating profit margin, while a partial recovery to 20.11% in 2025 is attributable to the increased impact of the effective cash tax rate, despite a further reduction in operating profit margin.
In summary, while capital turnover remained consistent, the ROIC performance was primarily driven by changes in operating profit margin and the effective cash tax rate. The decline in operating profit margin in the latter years represents a potential area of concern, although the increasing tax rate impact partially offset this effect in 2025.
Operating Profit Margin (OPM)
Lockheed Martin Corp., OPM calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
OPM = 100 × NOPBT ÷ Sales
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibited fluctuations over the five-year period. Initial values demonstrated a slight decline, followed by an increase, and then a subsequent decrease.
- Operating Profit Margin (OPM) - Trend Analysis
- In 2021, the operating profit margin stood at 11.85%. A modest decrease was observed in 2022, with the margin declining to 11.60%. The following year, 2023, saw a notable improvement, as the operating profit margin increased to 13.04%, representing the highest value within the observed timeframe. However, this positive trend did not persist. A significant reduction in the operating profit margin occurred in 2024, falling to 10.03%. This downward trend continued into 2025, with the margin further decreasing to 9.10%.
The net operating profit before taxes generally increased from 2021 to 2023, aligning with the peak in operating profit margin. However, a decline in NOPBT was observed in both 2024 and 2025, coinciding with the decreasing operating profit margin. Sales also showed an overall increasing trend, though not consistently year-over-year.
- Relationship between Sales and OPM
- While sales increased from 2021 to 2025, the operating profit margin did not follow the same trajectory. The increase in sales in 2024 and 2025 did not translate into a corresponding improvement in profitability, as indicated by the declining operating profit margin. This suggests potential pressures on costs or pricing strategies that offset the benefits of higher sales volume.
The observed decrease in operating profit margin in the latter years of the period warrants further investigation to determine the underlying causes, such as increased input costs, competitive pricing pressures, or changes in product mix.
Turnover of Capital (TO)
Lockheed Martin Corp., TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Invested capital. See details »
2 2025 Calculation
TO = Sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The period under review demonstrates a generally stable, though modestly fluctuating, relationship between sales and invested capital. Sales experienced a slight decrease between 2021 and 2022, followed by increases in subsequent years, culminating in a notable rise between 2024 and 2025. Invested capital also exhibited some volatility, decreasing in 2022 before stabilizing and increasing through 2025. The Turnover of Capital (TO) ratio, which reflects the efficiency with which capital is used to generate sales, remained relatively consistent throughout the analyzed timeframe.
- Sales Trend
- Sales decreased from US$67,044 million in 2021 to US$65,984 million in 2022, representing a decline of approximately 1.6%. Subsequent years saw increases, with sales reaching US$67,571 million in 2023, US$71,043 million in 2024, and US$75,048 million in 2025. The largest year-over-year increase occurred between 2024 and 2025, with a growth rate of approximately 5.6%.
- Invested Capital Trend
- Invested capital decreased from US$28,620 million in 2021 to US$26,603 million in 2022, a decrease of approximately 7.1%. It then showed a modest increase to US$27,427 million in 2023, followed by further increases to US$28,784 million in 2024 and US$30,349 million in 2025. The increase between 2024 and 2025 was approximately 5.4%.
- Turnover of Capital (TO) Analysis
- The Turnover of Capital ratio remained remarkably stable. It began at 2.34 in 2021, increased to 2.48 in 2022, and then fluctuated slightly, registering 2.46 in 2023, 2.47 in 2024, and remaining at 2.47 in 2025. This consistency suggests a stable efficiency in utilizing invested capital to generate sales revenue. The initial increase in 2022, coinciding with a decrease in invested capital and a slight decrease in sales, indicates a temporary improvement in capital utilization. However, this effect normalized in subsequent periods.
Overall, the observed trends suggest a business that is effectively managing its capital base, maintaining a consistent level of efficiency in converting invested capital into sales. The recent increases in both sales and invested capital, coupled with the stable TO ratio, indicate a healthy growth trajectory.
Effective Cash Tax Rate (CTR)
Lockheed Martin Corp., CTR calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The effective cash tax rate exhibited considerable fluctuation over the five-year period. While net operating profit before taxes demonstrated some variability, the cash operating taxes paid showed a more pronounced shift, driving the changes in the effective cash tax rate.
- Effective Cash Tax Rate (CTR) - Overall Trend
- The effective cash tax rate began at 18.89% in 2021, increased to a peak of 24.95% in 2022, then decreased to 20.72% in 2023 and 23.33% in 2024. A significant decline was observed in 2025, with the rate falling to 10.59%.
- CTR - Year-over-Year Changes
- From 2021 to 2022, the effective cash tax rate increased by 6.06 percentage points. This was accompanied by a rise in cash operating taxes from US$1,500 million to US$1,910 million, while net operating profit before taxes slightly decreased. A subsequent decrease of 4.23 percentage points occurred between 2022 and 2023, coinciding with a reduction in cash operating taxes and an increase in net operating profit before taxes. The rate increased again slightly from 2023 to 2024, with both cash operating taxes and net operating profit before taxes decreasing. The most substantial change occurred from 2024 to 2025, with a decrease of 12.74 percentage points, driven by a substantial decrease in cash operating taxes from US$1,662 million to US$723 million, despite a further decrease in net operating profit before taxes.
- Relationship between NOPBT and Cash Taxes
- The fluctuations in the effective cash tax rate do not appear to be directly proportional to changes in net operating profit before taxes. For example, net operating profit before taxes increased from 2022 to 2023, but the effective cash tax rate decreased. Conversely, net operating profit before taxes decreased from 2023 to 2024, while the effective cash tax rate increased. This suggests that factors beyond pre-tax income, such as tax credits, changes in deferred tax assets/liabilities, or specific tax planning strategies, are significantly influencing the actual cash taxes paid.
The considerable decrease in the effective cash tax rate in 2025 warrants further investigation to understand the underlying reasons for the reduced cash tax outflow.