Lockheed Martin Corp. (NYSE:LMT)

The financial performance, as indicated by the provided metrics, exhibits notable fluctuations over the observed period. Return on Equity (ROE) demonstrates a significant degree of variability, heavily influenced by changes in both Return on Assets (ROA) and Financial Leverage. A general trend of increasing leverage is apparent, while ROA shows more cyclical behavior.

Return on Assets (ROA)

ROA began at 12.06% in March 2022, decreased to a low of 9.09% in June 2022, and then recovered to 11.28% by September 2022. It remained relatively stable through the end of 2022 and into the first half of 2023, with a peak of 13.19% in December 2023. A decline is then observed through June 2025, reaching 7.14% in June 2025 before a partial recovery to 8.38% in December 2025. This suggests a sensitivity to underlying operational efficiency or asset utilization that varies over time.

Financial Leverage

Financial Leverage consistently increased throughout the period. Starting at 5.15 in March 2022, it rose steadily, reaching 7.67 by December 2023. While there is some fluctuation, the leverage ratio generally remains elevated, peaking at 11.04 in March 2024 before decreasing to 8.90 by December 2025. This indicates an increasing reliance on debt financing.

Return on Equity (ROE)

ROE mirrors the combined effect of ROA and Financial Leverage. It began at a high of 62.10% in March 2022, then experienced a substantial decrease to 41.16% in June 2022, aligning with the initial drop in ROA. ROE then increased significantly, reaching a peak of 101.24% in December 2023, driven by both improved ROA and increased leverage. A subsequent decline is observed, falling to 74.65% by December 2025. The highest ROE values correlate with periods of both strong asset performance and high financial leverage. The decline in ROE from December 2023 through December 2025 is attributable to both decreasing ROA and a moderation in financial leverage.

The interplay between ROA and Financial Leverage is critical to understanding the observed ROE performance. While increasing leverage initially amplifies returns, the recent decline in ROA suggests that sustained high leverage may not be sufficient to maintain elevated ROE levels. The company’s ability to improve asset utilization will likely be a key factor in future ROE performance.

The three-component DuPont analysis reveals significant fluctuations in Return on Equity (ROE) over the observed period. These fluctuations are driven by changes in Net Profit Margin, Asset Turnover, and Financial Leverage. A general trend of increasing ROE is apparent from early 2022 through late 2023, followed by a moderation and some volatility in more recent quarters.

Net Profit Margin

Net Profit Margin demonstrates considerable variability. It began at 9.45% in March 2022, decreased to a low of 7.33% in June 2022, and then recovered to around 9% by the end of 2022. A further increase was observed in the first half of 2023, peaking at 10.48% in June 2023. However, the margin experienced a notable decline in the latter half of the period, falling to 5.85% in June 2025. The most recent value, 6.69% in December 2025, suggests a slight recovery but remains below the levels seen in 2023.

Asset Turnover

Asset Turnover remained relatively stable between March 2022 and December 2022, fluctuating between 1.18 and 1.29. A slight downward trend was observed in the first half of 2023, reaching a low of 1.18 in June 2023. The ratio then stabilized around 1.22-1.29 for the remainder of the period, with no clear directional trend. The most recent value of 1.25 in December 2025 is consistent with the recent range.

Financial Leverage

Financial Leverage exhibited a clear upward trend throughout much of the period. Starting at 5.15 in March 2022, it increased to 7.67 by December 2023. The leverage ratio peaked at 8.92 in June 2024 before declining to 8.90 in December 2025. The increase in financial leverage contributed significantly to the rise in ROE observed during this period. The recent stabilization and slight decrease in leverage may indicate a shift in capital structure strategy.

Return on Equity (ROE)

ROE mirrored the combined effects of the three components. It began at 62.10% in March 2022, decreased substantially to 41.16% in June 2022, and then increased to 61.86% by December 2022. The most significant increase occurred between March 2023 and December 2023, with ROE reaching a peak of 101.24%. Subsequently, ROE decreased to 74.65% in December 2025, largely due to the decline in Net Profit Margin, despite the continued high level of Financial Leverage. The fluctuations in ROE highlight the sensitivity of the metric to changes in profitability and capital structure.

The interplay between these three ratios demonstrates that while Financial Leverage played a key role in boosting ROE, the sustainability of this performance is dependent on maintaining a healthy Net Profit Margin. The recent decline in margin warrants attention, as it could potentially offset the benefits of higher leverage in the future. Asset Turnover remained relatively consistent and did not contribute significantly to the observed ROE fluctuations.

The five-component DuPont analysis reveals significant fluctuations in Return on Equity (ROE) over the observed period. These fluctuations are driven by changes in the underlying components: Tax Burden, Interest Burden, EBIT Margin, Asset Turnover, and Financial Leverage. A general trend of increasing ROE is apparent from the beginning of the period through late 2023, followed by a decline and subsequent partial recovery.

Tax Burden

The Tax Burden demonstrates relative stability, consistently remaining above 0.84 throughout the period. Minor fluctuations exist, generally oscillating between 0.84 and 0.86. A slight decrease to 0.82 is observed in June 2025, before recovering to 0.85 by the end of the period. This indicates a consistent, though not entirely fixed, effective tax rate.

Interest Burden

The Interest Burden exhibits a decreasing trend over the majority of the period, declining from 0.93 in March 2022 to 0.82 in June 2025. This suggests improved efficiency in managing interest expenses or a shift in capital structure towards less debt. A slight increase to 0.84 is noted in December 2025, but remains below the initial values. This improvement contributes positively to ROE.

EBIT Margin

The EBIT Margin displays considerable volatility. It begins at 12.11% in March 2022, dips to 9.54% in June 2022, and then generally increases, peaking at 13.45% in June 2023. A substantial decline is then observed, falling to 8.28% in March 2025, before recovering to 9.38% in December 2025. This suggests sensitivity to operational performance and potentially external economic factors. The margin’s fluctuations significantly impact overall ROE.

Asset Turnover

Asset Turnover remains relatively stable, fluctuating between 1.18 and 1.29. A slight downward trend is visible from March 2022 to June 2023, followed by a recovery and stabilization around 1.25. This indicates consistent efficiency in utilizing assets to generate revenue, with minor variations throughout the period.

Financial Leverage

Financial Leverage demonstrates a clear increasing trend, rising from 5.15 in March 2022 to a peak of 11.04 in March 2025. This indicates an increasing reliance on debt financing. A subsequent decrease to 8.90 in December 2025 suggests a potential recalibration of the capital structure. The increase in leverage significantly amplifies the impact of both positive and negative changes in other components on ROE.

The substantial increase in ROE observed between March 2022 and December 2023 appears to be driven by a combination of improved EBIT Margin, increasing Financial Leverage, and a relatively stable Interest Burden. The subsequent decline in ROE from December 2023 through March 2025 is primarily attributable to the significant drop in EBIT Margin, despite continued high Financial Leverage. The partial recovery in ROE by December 2025 is linked to the improvement in EBIT Margin and a slight decrease in Financial Leverage. The interplay between these components highlights the sensitivity of ROE to operational profitability and financial strategy.

The financial performance, as indicated by the two-component disaggregation of Return on Assets (ROA), exhibits notable fluctuations over the observed period. Generally, ROA demonstrates a cyclical pattern, with peaks in late 2022 and early 2023, followed by a decline and a subsequent partial recovery. This behavior is driven by concurrent movements in Net Profit Margin and Asset Turnover.

Net Profit Margin

The Net Profit Margin experienced a decrease from 9.45% in March 2022 to a low of 5.85% in June 2025. Initial declines were observed through June 2022, followed by a recovery peaking at 10.48% in June 2023. A more pronounced downward trend then emerged, culminating in the lowest observed margin in June 2025. A slight increase to 6.69% is noted in December 2025, suggesting a potential stabilization or early stage of recovery. The overall trend indicates increasing pressure on profitability.

Asset Turnover

Asset Turnover remained relatively stable between March 2022 and June 2023, fluctuating within a narrow range of 1.18 to 1.28. A significant increase to 1.29 was observed in December 2022, followed by a return to the previous range. From September 2024, a slight downward trend is visible, though the ratio remains above 1.20 throughout the period. This suggests a consistent, though modestly changing, efficiency in utilizing assets to generate revenue.

Return on Assets (ROA)

ROA peaked at 13.19% in December 2022, coinciding with favorable conditions in both Net Profit Margin and Asset Turnover. The subsequent decline in ROA, reaching a low of 6.97% in September 2025, largely reflects the decreasing Net Profit Margin, despite the relatively stable Asset Turnover. The partial recovery to 8.38% in December 2025 is attributable to a modest increase in both components. The correlation between ROA and Net Profit Margin is particularly strong, indicating that profitability is the primary driver of overall asset performance.

The period under review demonstrates a clear interplay between profitability and asset utilization in determining overall returns. While asset efficiency remains relatively consistent, fluctuations in the Net Profit Margin have a substantial impact on ROA. The recent decline in ROA warrants further investigation into the factors affecting profitability, such as cost management, pricing strategies, and competitive pressures.

The financial performance, as indicated by the four-component DuPont analysis, reveals several noteworthy trends over the observed period. Return on Assets (ROA) experienced fluctuations, generally peaking in late 2022 and early 2023 before declining through 2024 and showing some recovery in the most recent periods. This ROA movement is attributable to shifts in the underlying components of profitability and efficiency.

Tax Burden

The tax burden remained remarkably stable throughout the period, fluctuating within a narrow range of 0.84 to 0.86. This consistency suggests minimal impact from changes in tax regulations or the company’s tax strategy during the analyzed timeframe. A slight decrease is observed in the latest two periods, moving to 0.82 and then 0.84.

Interest Burden

The interest burden demonstrated a consistent downward trend, decreasing from 0.93 in March 2022 to 0.84 in December 2025. This indicates an improving ability to cover interest expenses, potentially due to debt reduction, refinancing at lower rates, or increased earnings. The decline is most pronounced between June 2025 and December 2025.

EBIT Margin

The EBIT margin exhibited significant volatility. It initially decreased from 12.11% to 9.09% before recovering to a peak of 13.45% in June 2023. Subsequently, the margin declined substantially to 8.28% in March 2025, before a partial recovery to 9.38% in December 2025. This suggests sensitivity to revenue growth, cost control, or product mix changes. The most recent periods show a positive trend.

Asset Turnover

Asset turnover remained relatively stable, generally fluctuating between 1.18 and 1.29. A slight downward trend is visible from March 2022 to March 2025, followed by a modest increase in the latest two periods. This indicates a consistent, though slightly varying, efficiency in generating sales from its asset base. The recent increase suggests improved asset utilization.

The interplay between these components explains the ROA trends. The initial ROA decline in late 2022 and early 2023 was largely driven by the decrease in the EBIT margin. The subsequent ROA recovery was supported by both the improving EBIT margin and the decreasing interest burden. The ROA decline in 2024 was primarily attributable to the significant drop in the EBIT margin, despite the continued favorable trend in the interest burden. The recent ROA improvement in late 2025 is a result of both a recovering EBIT margin and a slightly improved asset turnover.

Overall, the analysis suggests the company’s profitability, as measured by the EBIT margin, is a key driver of its ROA. While the interest burden has consistently improved, its impact is secondary to the fluctuations in profitability. Asset turnover demonstrates stability, indicating consistent operational efficiency.

The financial performance metrics reveal distinct trends over the observed period. Generally, the period from March 2022 to June 2023 demonstrates a pattern of improvement, followed by a period of decline into early 2024, and a partial recovery towards the end of the observed timeframe. The interplay between tax burden, interest burden, and EBIT margin significantly influences the net profit margin.

Tax Burden

The tax burden exhibits relative stability, fluctuating within a narrow range between 0.84 and 0.86 throughout the period. A slight increase is noted towards the end of the observation period, reaching 0.86 in several quarters, before decreasing slightly to 0.85 in the final quarter. This consistency suggests minimal impact from changes in tax regulations or the company’s tax strategy.

Interest Burden

A consistent downward trend is observed in the interest burden. Starting at 0.93 in March 2022, it gradually decreases to 0.84 by December 2025. The most significant decline occurs between March 2024 and June 2025, dropping from 0.89 to 0.82. This reduction likely reflects successful debt management strategies, potentially including refinancing at lower rates or a decrease in overall debt levels.

EBIT Margin

The EBIT margin demonstrates more volatility than the tax and interest burdens. It experiences a decline from 12.11% in March 2022 to 9.54% in June 2022, followed by a recovery to 11.66% in September 2022. The margin generally remains above 10% through September 2023, peaking at 13.45% in June 2023. A notable decrease begins in March 2024, falling to a low of 8.18% in September 2024, before partially recovering to 9.38% by December 2025. This fluctuation suggests sensitivity to operational performance and potentially external economic factors.

Net Profit Margin

The net profit margin mirrors the trends observed in the EBIT margin, albeit with a dampened effect. It declines from 9.45% in March 2022 to 7.33% in June 2022, then recovers to 9.07% by September 2022. The margin peaks at 10.48% in June 2023, coinciding with the peak in EBIT margin. A significant decline is then observed, reaching a low of 5.73% in September 2024. A partial recovery occurs in the latter quarters, with the margin reaching 6.69% by December 2025. The consistent influence of the tax and interest burdens moderates the impact of EBIT margin fluctuations on the net profit margin. The decreasing interest burden partially offsets the decline in EBIT margin, contributing to the observed partial recovery in net profit margin towards the end of the period.

In summary, the observed trends suggest a period of strong performance followed by challenges, with a recent indication of stabilization and potential recovery. The company’s ability to manage its interest expenses appears to be a key factor in mitigating the impact of fluctuations in operational profitability.