Lockheed Martin Valuation -2026

Lockheed Martin (LMT): DCF valuation, October 2026 I value Lockheed at about $478 a share on an FCFF DCF built on Damodaran's Ginzu model. The stock closed at $629.75 on 28 Oct, so it trades at roughly 1.3x my base value. I wouldn't call it badly overvalued, though. If Lockheed keeps earning around 15% on new capital after year 10, instead of dropping to its cost of capital, the value comes to about $637, which is roughly where the stock trades today. Base year I used trailing twelve months to 27 Sep 2026 (FY25 full year plus the first nine months of 2026 from the Q3 10-Q). - Sales: $79.1bn - Operating profit: $9.3bn (11.8% margin) - Backlog: $292bn, after the $52.5bn PAC-3 award. That's about 3.7 years of sales. - Balance sheet: $20.5bn of long-term debt against $6.0bn of cash, plus $3.9bn of accrued pension liabilities. On the growth estimates Street EPS growth is 42.78% for 2026 and 8.31% for 2027. The 2026 figure is mostly recovery from the 2025 program charges, and three quarters of 2026 is already in my base year. So I used 8.31% as year-1 revenue growth. Assumptions - Revenue growth: 8.31% in year 1, then 6% a year in years 2 to 5, fading to the risk-free rate (4.77%) by year 10. - Operating margin: held at 12.5% throughout, which is today's 11.8% with R&D capitalised. - R&D: capitalised over 10 years. Lockheed doesn't break out IR&D in the 10-Q, so part of the history is estimated. It's only about 2.5% of sales and doesn't move the value. - Sales to capital: 2.5. - Cost of capital: 7.99%, moving to 8.69% by year 10. Inputs are: - risk-free rate 4.77% (10Y at 4.99% less the US default spread) - ERP 3.92% (Damodaran, Oct 2026) - beta 0.97 (relevered from the US aerospace/defense industry beta) - Debt: the unfunded pension counts as debt after tax ($2.95bn). Operating leases are about $1.2bn. - Tax rate: 15.6% now, moving to 25% by year 10. - Shares: 232.0m diluted. Valuation | Item | $bn | |---|---| | PV of cash flows, years 1-10 | 57.8 | | PV of terminal value | 71.8 | | Operating assets | 129.7 | | Less debt, leases and pension | (24.7) | | Plus cash | 6.0 | | Equity value | 111.0 | | Per share | $478.45 | Scenarios | Scenario | Value/share | Price/value | |---|---|---| | Bear (5% yr-1 growth, 3% growth after, 10% margin) | $305.23 | 2.06x | | Margin fades to 10% | $368.46 | 1.71x | | Consensus year-1 growth (7.6%) | $474.79 | 1.33x | | Base | $478.45 | 1.32x | | Margin rises to 13.5% | $522.45 | 1.21x | | Budget boom (9% growth, 13.5% margin) | $588.16 | 1.07x | | 15% return on capital after year 10 | $636.97 | 0.99x | | Bull (9% growth, 13.5% margin, 15% terminal ROIC) | $790.69 | 0.80x | What the price implies With the standard terminal assumption, $629.75 needs about 13.1% annual growth in years 2 to 5, or a long-run margin of about 15.9%. Both are above what Lockheed has done historically. If you assume a 15% return on capital after year 10, the price only needs 5.7% growth, which is below my base case. So the question is whether Lockheed's position on F-35, missile defense and classified programs is a lasting moat. If it is, the stock is fairly priced. If it isn't, it looks expensive. Risks - Program charges: fixed-price and classified program losses hit 2024-25, and one classified program is at about $1.8bn of cumulative losses. - Budget: the FY27 $1.5tn defense request hasn't been appropriated yet, and funding is on a continuing resolution until 11 Dec 2026. - Capital returns: there have been no buybacks this year, and the 10-Q flags executive orders as a risk to capital returns. - Customer concentration: the US government was 72% of 2025 sales, and the F-35 alone was 27%. - Pension: the FAS/CAS pension adjustment adds about $1.7bn a year to operating profit. - Ultra Maritime: the $3.45bn cash acquisition closes in Q4 2026 and isn't in these numbers. My read: Lockheed looks moderately expensive on standard assumptions, and fairly priced if you believe the moat holds.

Us Ai stocks vs NIFTY IT index correlation

 US AI Complex vs Nifty IT: Correlation Study — Preliminary Findings

Prepared 4 August 2026.

Question and method

Does the US AI/semiconductor complex show negative correlation with Nifty IT — the substitution thesis being that AI capex displaces spend on outsourced IT services? Tested on daily log returns, 1 Aug 2023 to 4 Aug 2026. US basket is an equal-weighted average of NVIDIA, Micron, AMD, SOXX and KOSPI. India side is the Nifty IT Total Returns Index, used directly. Pearson correlation on matched trading days, no forward-fill across holidays.

Headline result

Full sample does not support a stable negative correlation. The reading is weak and positive: common tech-sector risk has dominated any AI-substitution effect over the three-year window.

Same-day correlation: 0.105

T+1 correlation (US day t, India day t+1): 0.063

R²: 1.1%

p-value: 0.006

n (paired trading days): 690

The relationship is regime-dependent

A single full-sample number hides the pattern. Broken into sub-periods, correlation stayed positive through most of the sample and only turned negative in the most recent stretch.

Pre-AI narrative (Aug ’23 – Dec ’24): n=314, correlation 0.149

Nifty IT topping (Dec ’24 – Feb ’26): n=266, correlation 0.260

AI shock (Feb – Jun ’26): n=87, correlation 0.073

AI trade falters (Jul – Aug ’26): n=24, correlation −0.433

60-day rolling correlation

Across the full sample, the 60-day rolling correlation ranged from −0.19 to +0.48. It stayed in a broadly positive 0.1–0.4 band for most of the three years, spiked to its highest level in February 2026, then fell sharply from around April 2026 onward. The current reading, −0.19, is the lowest of the entire sample.

How recent is the shift

Correlation from a fixed start date to today, at three cutoffs. Strengthens and only clears statistical significance in the most recent month; n shrinks fast as the window narrows, so the July figure should be read as indicative, not conclusive.

Jan 1, 2026: n=130, correlation −0.068, p=0.445, not significant at 95%

Apr 1, 2026: n=77, correlation −0.186, p=0.105, not significant at 95%

Jul 1, 2026: n=24, correlation −0.433, p=0.035, significant at 95%

Event study

Cumulative return in the five trading days before and after each catalyst date. 4 of 6 events show the two baskets moving in opposite directions; the 22 July divergence is the largest in the sample.

4 Feb 2026 — AI model launch, automation-fear selling begins. US AI +6.3%, Nifty IT −3.5%. Diverged: yes

12 Feb 2026 — Infosys, Wipro, TCS from 4 Feb 2026 — AI model launch, automation-fear selling begins. US AI +6.3%, Nifty IT −3.5%. Diverged: yes

12 Feb 2026 — Infosys, Wipro, TCS fall on AI disruption fears. US AI +1.4%, Nifty IT −3.5%. Diverged: yes

30 Jun 2026 — Nifty IT lowest since Apr 2023, −43% from peak. US AI −9.8%, Nifty IT +6.0%. Diverged: yes

2 Jul 2026 — Sharp IT sector rebound. US AI +3.8%, Nifty IT +1.9%. Diverged: no

22 Jul 2026 — Alphabet raises AI capex guidance, US tech sells off. US AI −19.7%, Nifty IT +8.7%. Diverged: yes

29 Jul 2026 — Indian IT rallies as global AI trade falters. US AI +8.8%, Nifty IT +1.9%. Diverged: no

Caveats

• Returns are in local currency, USD and INR. Not FX-adjusted; rupee moves are embedded in the India series.

• Same-day correlation is not contemporaneous. Indian markets close before the US opens. The T+1 test is the more defensible one, and it reads weaker, not stronger, than same-day.

• Correlation is not causation. A negative reading is consistent with the substitution thesis; it does not confirm it.

• Event dates were chosen because the sector moved on them. That guarantees a reaction and proves nothing about an ordinary day.

• Nifty IT is float-weighted and dominated by TCS and Infosys. The US basket is equal-weighted. The two sides are not symmetric.

Bottom line

Three years of data do not support a stable negative correlation between the US AI complex and Nifty IT. The relationship was mildly positive for most of the period. A negative correlation has emerged since roughly April 2026 and has strengthened since, reaching significance only in the past month. Treat this as an emerging regime to monitor, not a proven hedge relationship.

Data: NVIDIA, Micron, AMD, SOXX, KOSPI adjusted close (EODHD); Nifty IT Total Returns Index (NSE), as supplied.

 Psychological Biases in Behavioral finance explained!

Some of the most common psychological biases in finance include:

1. Confirmation bias: In simple terms, confirmation bias involves constantly seeking answers that confirm pre-existing ideas or beliefs.
2. Status quo bias: This is the tendency to maintain current beliefs or viewpoints. It can be a dangerous bias as it may stem from general laziness in implementing changes to one's views.
3. Overconfidence bias: This bias involves overestimating accuracy when predicting a model or belief. Spending time and effort on something may lead to overconfidence in the thought process.
4. Prudence bias: This bias involves the tendency to be overly cautious and reduce extreme views on finance.
5. Availability bias: This bias involves the tendency to rely more on recent or easily recalled events rather than others.

WHO is REIT AUNTY?! ( REITS Explanations, Finmaas #1)

Finance made Simple (FINMAAS) - #1 REITS

WHO is REIT AUNTY?! (NOTE: Shes not a real aunty ) 

REIT ( AN INVESTMENT INSTRUMENT)

An Equity REIT, or "Real Estate Investment Trust," is a company that owns multiple rental units, generating rental income for its shareholders. It combines the benefits of both owning shares and real estate. Owning commercial property in India is highly expensive and often inaccessible for the young and upcoming population, typically requiring at least 1-2 crores. A REIT offers a much cheaper alternative. Essentially, a REIT purchases large commercial properties and leases them out to big companies, and they are financed by the shareholders who invest in the REIT. Legally, REITs must distribute at least 90% of the rental income they receive, offering investors a combination of shareholding and real estate ownership benefits.

For example, Embassy Office Parks is a REIT based in India, currently trading at 369 Rs on the stock exchange. An important metric for this REIT is the Distribution per Unit, indicating how much money it pays per share. Embassy Office Parks pays 5.2 rupees per quarter, totaling around 20 rupees per year, which translates to approximately a 5.4% payout compared to the investment. While it might not be an ideal investment presently, acquiring shares at the right price and with potential company expansion , it could be a good way to diversify your portfolio!

Advantages:

• Low Investment: Instead of buying prime real estate, investors can receive guaranteed rental income with relatively low investment.
• Liquidity: REIT shares are highly liquid, allowing investors to sell them off quickly if needed.
• Managed by Professionals: Investors benefit from having the property managed by professionals, avoiding the legal and operational complexities of owning commercial buildings.

Disadvantages:

• Price/Current Valuation Risk: Depending on market trends, owning a REIT may not always be financially viable.
• Investment Risk: There is a risk of losing the initial investment in REITs.
• Lack of options in india: Still a lack of options in India.

• My name is William and I am a CFA aspirant, I love doing analysis on these companies and I hope to follow up with more blogs. I currently hold both US and Indian stocks and will be looking to analyse stocks in all sectors once I have fully understood how to give stocks ratings based on their current value and future predictions. Thank you for reading and I hope you can spread this blog to your friends if you found this beneficial.
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(Note: I may or may not hold this stock and any stock suggestions are highly risky and subject to market risks. Any Queries, you can send an e-mail to williammani15@gmail.com)

Finance made Simple - New series!

Finance Made Simple is a new blog series aimed at normal individuals and intermediate investors. In this series, I aim to simplify financial concepts, making them understandable to the general public. Each installment of Finance Made Simple will be tagged with “FinMaS”.

Throughout this series, I'll try to explain various financial theories and concepts in a more straightforward manner. Topics will include stock analysis, , market segment analysis, economic trends, and much more. Previously, I conducted an in-depth analysis of why individuals should consider investing in the stock market, and I intend to expand on that foundation.

Please note: I am not an English major, there may be minor grammatical errors in my writing, for which I hope i can be excused. If you notice any other issues, please feel free to email me at williammani15@gmail.com.

A bit about myself - I am a Level 3 Chartered Financial Analyst candidate with three years of experience in the financial sector. I hold an undergraduate degree in commerce and am currently pursuing a master’s in finance. My expertise includes financial modeling and its practical applications. While I'm not perfect, I believe my unique perspective may offer valuable insights to some readers.

Here are some topics I plan to cover in the coming weeks:

• Tata Motors Analysis
• HDFC Bank: A Disaster or a Gem Among Giants?
• India’s Future Position in the Global Economy and Potential Threats
• The Financial Journey of a Cab Driver: Why Financial Planning Matters

Please read by previous blogs also to get a better idea of the content i provide :-

https://investingwithwill.blogspot.com/2021/09/a-littleintroduction-stock-market-when.html

Stay tuned, and the next blog installment will be posted in a few days!

Warm regards, William Mani

Meta (Facebook) and should you invest in it

 Fundamental analysis (Qualitative)

(Note: I may or may not hold this stock and any stock suggestions are highly risky and subject to market risks. Any Queries, you can send an e-mail to wilmangroup2020@gmail.com)

In my opinion, when thinking of valuable companies to invest in for the long term -  app or online-based companies are a huge no go for any investor due to the high chance of it getting replaced  easily. I would call such app-based companies “typewriter companies”(A company whose main source of income can get easily replaced) . Since nearly 98% of Meta’s revenue is coming from Facebook, Instagram and WhatsApp, then it should belong in the typewriter company category, right? Well, if  Meta was only responsible for Facebook and Instagram, I would strongly suggest to an investor to stay as far away as possible from this company and categorise it as a typewriter company. But the recent investment of more than 10 billion USD in Augmented Reality has made me look back at this “Typewriter company” and really made me think. Can this social media giant grow even further to be a revolutionary next-gen augmented reality company that will change the world? - the answer is a no………for now? 

Meta(Facebook) has been investing heaps of money into the “Metaverse” and the metaverse is a risky venture even for a company like meta which has tons of cash reserves with them. The technology they are trying to create seems impractical, but only for the near future. Who is to say that we won’t hop on the “Metaverse train” after five years? You can ask me - why would people even use the metaverse? –To answer that I will give you the same definition of metaverse that made me understand what it is. I found out about the metaverse in a shady crypto website that did a surprisingly good job of explaining to me what the metaverse is. It stated that the metaverse is a reality where people can practically do everything online using their own avatar. Online shopping, gaming, work and many more activities. So, the possibilities are endless? right?

So should you invest in Meta?. I’m taking a standpoint and giving it a resounding no…. for now. Although I won’t be investing in this company soon, I will be waiting anxiously to see what they will be doing in the future. The year 2022 will be a crucial year for the metaverse. For Facebook, its time as an online platform will be slowly dying out like a candle in the wind, and I know this because even Meta's CEO – Mark Meme-man Zuckerberg is Skeptical about Facebook's future. Maybe that is why he created the metaverse in the first place, to give hope to the investors while he hides the eventual doom that is Facebook. Although this might be the case, upon looking more into Mark, who seems to be emotionless, we see a highly intelligent being who created the social media movement. After all, Mark was the one who created Facebook, who is to say he won’t create the next big thing.

Financial Evaluation/Risk Factors

Even though investing in the company is a no, for now, let's talk about their finances and latest news-

Recently the news has been filled with information about Facebooks parent company – Meta. In this month of February, the share price has gone down nearly 26% -

Reasons for the decline of share prices

 1) Facebooks decline in users for the first time in 18 years.

 2) Apple’s privacy changes enable users to choose whether apps can track them or not.

 3) Lawsuits, government regulations and overall uncertainty of the future of the company.

(These are only the main 3 reasons for the decline, there are plenty more!)

 Meta is an Internet-based company, and its “Family of apps” (Meta’s name for their app-based services) includes Facebook, Instagram and WhatsApp. These FoA’s (Family of Apps) makes up nearly 98% of the revenues of META.

My analysis of these Family of Apps(FoA) services –

Facebook – “Likely to go down over time, with already declining user rates”. But the decline for the fourth quarter of 2021was 0.12% of users which is almost negligible but has scared investors and hence lead to the downfall of the share.

Instagram – “Highly addictive app, strong user base but faces competition from TikTok and YouTube”

WhatsApp – “Strong user base, but not really Revenue generating in my opinion due to lack of ads”

FoA Facts for the year 2021

-        1. Saw a 36% increase in revenue in 2021 (an increase of ~$31 billion)

-        2 Cost and expenses increased 29% (an increase of ~$13 billion)

-       3) Income saw a 45 % (increase of ~$17billion)

Now other than its Family of Apps, it also has its Reality Labs projects which are currently going at a loss and only producing 2% of Meta’s revenue. But Meta has been investing heavily in it, nearly 10 billion in the year 2021-2022. What does reality lab consist of? it consists of augmented and virtual reality products as explained in the fundamental analysis of the company. For now, the revenue is mostly from its sale of hardware such as Occulus rift (gaming and AR gear)

Competition – Even though Meta is such a huge company, its competition is also huge in size, Alphabet (Google) Amazon, Apple, Byte Dance (TikTok) Microsoft are some of its major competitors. You know what they say, the larger the size, the harder they fall. Facebooks competition is so strong they could literally annihilate the company if they really wanted to.

Other Risk Factors (from the Financial reports of META February  03,2022)

 

-    1) Loss of revenue due to lack of spending from advertising.

-    2) Unfavourable Media Coverage.

-    3) Slower user and Revenue Growth.

-    4) Government regulations/ Litigations.

     At the time of writing this blog, Meta is trading at a P/E ratio of just 17. So based on their latest Annual Report and fundamental analysis from my part - NO

   

    My name is William and I am a CFA aspirant, I love doing analysis on these companies and I hope to follow up with more blogs. I currently hold both US and Indian stocks and will be looking to analyse stocks in all sectors once I have fully understood how to give stocks ratings based on their current value and future predictions. Thank you for reading and I hope you can spread this blog to your friends if you found this beneficial.

Investing with Willl - Part A

 

A Little Introduction – the stock market

When some people hear the word “stock market”, the following scenario might be going through their heads’-

“Touching the stock market will lead to years of constant loss, followed by bankruptcy, followed by working as a handy man for your uncle’s business, it is a gamble and nothing more! I would rather invest my hard-earned money in gold/real estate than invest in the Stock market in which I cannot see or physically own”

Less than 2 % of Indians invest in the stock market because of thoughts like these. Investing in the stock market, in the long-term means that you will be a part owner of a public limited company and will benefit greatly if the company is performing well (Y-o-Y increase of the share price). You will receive a portion of the net profit as dividend.

For example, if you invest in the company Hindustan Unilever (HUL), it is responsible for brands like Horlicks, Dove, kissan etc., These are brands that we buy and use daily and known to be a good company to invest in.

Now the stock market is risky if you invest all your money on a company called XYZ because your uncle’s friend told you that XYZ will make you a crore Pati if you invest in it. This is an example of a bad investment, and it will almost definitely lead your investment to be highly risky.

Investing in quality companies which will consistently increase their earnings, while making sure what the company is doing won’t go irrelevant in the coming years is the key factor to successful investing,
Time is also an important element because investing in the long term (10-15 years) will give far greater returns than short term investing (The Intelligent Investor – Benjamin Graham)

What I consider to be the golden achievements of investing: -

1) Annual growth of the initial investment (CAGR of 11%+)
2) Protection of your initial investment (Risk Free)
3) Able to invest without putting a great amount of effort (Quarterly checks to be made)

A Little Background-

The power of compounding was very interesting to me. An amount of 10 lakhs invested in the stock market and kept for 20 years*(with a CAGR of 15%) will lead the amount to be 2 crores! (20x return)

So, I decided to start immediately. First thing I needed was to get the initial investment and a form of income since I am still in college. I decided that the one thing I can do is to list a small property that my father owned (a remade old wooden house) through Airbnb as “quarantine stays”, This initially made me a lot of money as a lot of people were looking for staycations due to the quarantine rules at that time. So, I started building up money in my account and investing it in quality companies. What are “quality companies”?.

I had started reading a book called Coffee-can Investing by an investor called Saurabh Mukherjee, and being a newbie to the investment space, it gave me information about “quality companies”, why people invest in the stock market and why investment favorites of the Indian households are often misleading(I’m looking at you Gold) since the absolute returns were rarely looked into.
If I could sum up what the book (Coffee can Investing) has taught me other than what the requirements for a good portfolio should be,

·      Residential Real estate investment often are misleading and might not be the greatest asset because of the high illiquidity of the asset, and generally poor absolute return. Selling of Residential property could lead to costs up to 10 % of the initial value of the property itself.

·      Mutual funds might be a better option, but expense ratios (~2.5%) each year mean that over the course of a 10-year mutual fund, nearly 30% of your funds will be lost due to the expense. Investing in Index Funds might be a better option

·      Commercial Real estate is better than Residential Real Estate, due to the higher rent yield that is given (in India).

 

The book also gave a good portfolio on how a person should invest his/her hard-earned money. The first part was setting up a goal, and dividing it into 3- security, stability and Ambition. The second step was basing your investment on that investment goal.

Note: Based on the book, The portfolio is usually divided into – 20 % Coffee Can Portfolio (with certain prerequisite requirements such as ROCE and 10-year Revenue Growth), 20% small-cap Mutual funds, 20 % Index funds, 20% good and clean portfolio (based on 2 components – good and clean) and finally 20% debt instruments (Bonds and debentures)).

 

The Willman List: -

The List is my comprehensive equity portfolio for the year 2021-2023. Current Pandemic has caused many pains to the world, but the stock market has been soaring to new heights despite the various effects of Covid-19 on the economy. This is also the year that I started Investing most of my income on buying equity, not because of the recent thirst for exponential short term gains that people are trying to make, but for a longer, stable investment for the next 10-25 years. In the following blogs I will be revealing what the portfolio consists of and the rationale behind it.

In the following blogs I will announce how you can achieve all of this based on principles I have understood from great investors such as Benjamin graham, Warren Buffet and Indian investors too.

Note: I am a beginner investor, with hopes that my vision and mindset will be a major part of the investment. I am still learning the technical aspect of investment, although almost all the important ratios (P/E, ROCE, Free Cash flow, Revenue growth etc.) will be taken into consideration. So, in conclusion, each firm will be given a technical aspect as well as why it might be of great value in the future. (Importance to renewable energy, Infrastructure, FMCG and financial industries)

Thank you for reading my first blog, and hopefully I can keep putting up these blogs.