LMT, RTX, or NOC: Which Defense Stock Could Deliver the Best Returns?

Geopolitical tensions have been on the rise in recent years. The Russia-Ukraine war and conflicts in the Middle East, most recently between Israel and Iran, have brought defense stocks back in focus. With a favorable demand backdrop in mind, we used TipRanks’ Stock Comparison Tool to place Lockheed Martin (LMT), RTX Corporation (RTX), and Northrop Grumman (NOC) against each other to find the defense stock that could deliver the best returns, according to Wall Street analysts.  

Lockheed Martin (NYSE:LMT)

Lockheed Martin is one of the prominent players in the aerospace and defense space. Last year, it generated revenue of $71 billion through its Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space businesses.

Recently, LMT stock was under pressure following a Bloomberg report that the U.S. Department of Defense (DoD) has halved its request to Congress for the F-35 jets for the air force to 24 this year, compared to 48 last year.

Despite this potential short-term pressure, several analysts remain bullish on LMT stock due to its diversified revenue streams and robust backlog. Notably, the company stated that its Q1 2025 backlog of about $173 billion represents more than two years of sales. Moreover, Lockheed Martin continues to enter into strategic deals to bolster its business. On Tuesday, LMT stock rose about 3% in reaction to the signing of a Memorandum of Understanding (MoU) with Korea Aerospace Industries (KAI), expanding their existing partnership on air systems to include rotorcraft manufacturing and other product categories.

Is LMT Stock a Good Buy Now?

Reacting to the F-35 news, Truist Securities analyst Michael Ciarmoli reiterated a Buy rating on Lockheed Martin stock with a price target of $579. The 5-star analyst noted that the F-35 accounted for about 25% of Lockheed Martin’s overall sales and nearly 61% of the Aeronautics segment’s revenue in 2024.

He acknowledged that, given LMT’s reliance on the F-35 program, the company’s revenues are at risk if the F-35 budget request is halved. That said, Ciarmoli noted that “moving pieces limit the risk until the final proposal is officially released.” He contended that securing Congressional approval to slash the F-35 program in half will be a hurdle alone, given that it has an estimated $72 billion impact on the American economy annually and supports over 290,000 jobs across all 50 states.

Overall, Lockheed Martin stock scores a Moderate Buy consensus rating on TipRanks based on seven Buys and eight Holds. The average LMT stock price target of $521.07 indicates about 11.2% upside potential. Additionally, LMT stock offers a dividend yield of 2.8%. Lockheed Martin stock is down 3.6% year-to-date.

See more LMT analyst ratings

RTX Corporation (NYSE:RTX)

RTX Corporation, previously known as Raytheon Technologies, operates via three businesses – Collins Aerospace, Pratt & Whitney, and Raytheon. RTX stock has rallied over 39% over the past year, thanks to strong fundamentals, demand driven by geopolitical tensions, and a rebound in aviation spending following the lull seen during the COVID-19 pandemic.  

The defense contractor and commercial aerospace supplier has impressed investors with its resilient performance and robust Q1 2025 backlog of $217 billion, including $125 billion of commercial and $92 billion of defense business.

However, there are some concerns about the impact of tariffs on RTX’s near-term performance. Back in April, the company cautioned investors about a $850 million hit to its 2025 operating profit from tariffs.

Is RTX Stock a Buy, Sell, or Hold?

Recently, Jefferies analyst Sheila Kahyaoglu raised the price target for RTX stock to $155 from $130 but maintained a Hold rating. The 5-star analyst boosted the price target to reflect the potential for margin improvement in the company’s Pratt & Whitney division.

Kahyaoglu also sees the possibility of RTX gaining from higher revenues from Raytheon’s defense business, if the division captures incremental budget dollars from the U.S. and European Union. The analyst remains sidelined on RTX stock due to certain uncertainties, including the achievement of $10 billion in free cash flow by 2027.

On TipRanks, RTX stock scores a Moderate Buy consensus rating based on 12 Buys and five Holds. The average RTX stock price target of $140.33 indicates 3.8% downside risk, following the 26% year-to-date rally in the stock. RTX stock offers a dividend yield of 1.9%.

See more RTX analyst ratings

Northrop Grumman (NYSE:NOC)

Aerospace and defense technology company Northrop Grumman disappointed investors with its Q1 2025 results and full-year earnings guidance cut to reflect losses on its B-21 stealth bomber program due to increased costs. However, the company maintained its sales and free cash flow outlook for 2025.

Northrop had previously warned investors about higher costs related to the beginning of the B-21 program. However, the B-21 program is expected to become more profitable as production surges.

Looking ahead, Northrop Grumman is confident of growth in the years ahead, driven by significant progress on its key programs. The company also highlighted its strong Q1 2025 backlog of $92.8 billion.

Is NOC a Good Stock to Buy?

Reacting to the disappointing Q1 2025 results, UBS analyst Gavin Parsons reduced his price target for Northrop Grumman stock to $571 from $583 and reiterated a Buy rating. Parsons thinks that a ramp to the 2025 outlook looks difficult. However, he remains bullish on NOC stock, as he believes that the company’s record backlog offers a longer-term growth opportunity.

With 10 Buys and five Holds, Northrop Grumman stock scores a Moderate Buy consensus rating. At $541.36, the average NOC stock price target indicates 9.4% upside potential. NOC stock’s dividend yield stands at 1.9%. Northrop Grumman stock has risen 5.4% year-to-date.

See more NOC analyst ratings

Conclusion

Wall Street is cautiously optimistic on the three defense stocks discussed here. Including dividend yield and expected appreciation in the stock, Lockheed Martin’s potential returns look slightly more attractive than Northrop Grumman, while Wall Street sees downside risk in RTX stock following a solid rally so far this year. Lockheed Martin boasts a diversified business and a strong backlog and is expected to gain from rising geopolitical tensions.