Al Root

Investors often focus on the U.S. defense budget when assessing Lockheed Martin, but growing military spending in Europe can benefit the weapons maker, too.

"We are trying to establish more production and more supply chains in Europe," said Raymond Piselli, Lockheed's vice president for international business, according to the company. "That establishes us more as part of the European aerospace and defense ecosystem."

Roughly one-quarter of Lockheed's sales go to international customers, with Europe representing about 40% of the international total. Asia and the Middle East are the other two main regions for global sales.

From 2022 to 2024, international sales grew almost 5% a year on average, while U.S. business grew closer to 3% a year. European business was a standout, up about 11% a year on average.

Lockheed exports about $20 billion in American-made military equipment annually. Exports of F-35 fighter jets, missiles, and Black Hawk helicopters should drive more growth in the coming years. About 30% of the company's backlog is tied to international business.

Lockheed also collaborates with European partners. It works with Germany's Rheinmetall on rocket artillery produced in Germany.

Coming into Friday trading, Rheinmetall stock had surged an incredible 250% since the Nov. 5 election, benefiting from President Donald Trump's push to have NATO members spend more on defense. Lockheed stock had fallen 15% over the same span, leaving it trading for about 17 times estimated 2025 earnings. The S&P 500 trades for closer to 22 times.

Perhaps more EU growth would make investors more willing to pay a higher valuation for Lockheed stock. Shareholders would like that.

Lockheed stock was flat in midday trading on Friday, just above $465 a share, while the S&P 500 and Dow Jones Industrial Average were up 0.2% and 0.1%, respectively.

Write to Al Root at allen.root@dowjones.com

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May 16, 2025 13:19 ET (17:19 GMT)

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