2026 guidance, F-35, missiles, cash flow: Lockheed, RTX, and Northrop are moving forward, but a Trump order threatens dividends and buybacks in the event of delays.
Summary
Between January 27 and 29, 2026, Lockheed Martin, RTX, and Northrop Grumman published solid results and, above all, 2026 forecasts that confirm a rare dynamic in the defense industry: demand is strong, order books remain high, and ammunition production is becoming a strategic issue. Lockheed Martin anticipates an increase in revenue driven by missile systems and the F-35, with a high free cash flow target. RTX is banking on organic growth, fueled by a massive backlog in both defense and civil aerospace. Northrop has a record order book but its guidance is considered cautious. At the same time, the White House has imposed a new political constraint: the Trump administration wants to link dividends and share buybacks to industrial performance, targeting delays and cost overruns. This mechanism changes the balance between shareholders and production capacity.
The contrast between euphoric guidance and political constraints
Within a few days, the three groups published a consistent picture: geopolitical tensions are sustaining demand, the government is pushing for faster production, and structural programs are driving revenues. In a normal market, this cocktail translates into improved prospects and sustained returns on capital.
Except that the Trump administration is adding a variable that is neither a rate hike nor a commodity shock: a governance constraint. The political message is simple, almost brutal: the defense industry is not like other sectors, and shareholders should not be served before the armed forces. Behind this slogan lies an operational challenge: in several segments, the American industrial apparatus has shown limitations in terms of pace, quality, and meeting deadlines.
This tension creates a paradox. Companies are promising more revenue and more cash, but the distribution of that cash could become conditional. This introduces a form of “delivery bonus” into stock market valuation: financial performance is no longer enough; industrial performance must also be proven.
Lockheed Martin’s results and trajectory for 2026
Lockheed Martin has announced its guidance for 2026, which is above expectations and structured around two drivers: the ramp-up of air defense systems and continued sales of combat aircraft. The group is targeting 2026 revenue of approximately $77.5 to $80.0 billion and adjusted earnings per share of $29.35 to $30.25. It also projects high free cash flow, announced at between $6.5 and $6.8 billion.
The industrial logic behind the increase
Demand for missiles and air defense is no longer just one segment among many. Lockheed has highlighted an acceleration in key interceptors and ammunition, with spectacular production targets: THAAD at around 96 to 400 units per year over several years, and PAC-3 at around 600 to 2,000 units per year. These volumes are transforming the supply chain: more propellants, more electronics, more testing, and direct pressure on subcontractors.
On the aerospace side, the F-35 remains the linchpin. Lockheed has reported delivering a record 191 aircraft in 2025, which is fueling short-term visibility. Export demand and allied requirements reinforce the idea that the F-35 is not just a product, but a platform whose ecosystem (maintenance, parts, upgrades) stabilizes revenues.
The sensitive issue for shareholders
Lockheed has a history of significant shareholder returns. As an order of magnitude, the company paid approximately $3.13 billion in dividends in 2025.
In a normal environment, cash flow guidance at this level provides breathing room to maintain dividends and buybacks. Now, the question becomes: how much freedom will remain if the administration considers that certain programs do not meet the “quality, deadlines, budget” triptych?
RTX’s performance between defense, civil aviation, and cash flow
RTX has posted robust quarterly performance, with fourth-quarter 2025 revenue of approximately $24.2 billion, up approximately 12% year-on-year. The 2026 guidance targets adjusted sales of $92 to $93 billion and adjusted earnings per share of $6.60 to $6.80.
The weight of the backlog as a buffer
RTX stands out with a massive order book: approximately $268 billion, including $107 billion in defense and $161 billion in civil. This composition matters. While defense is accelerating in ammunition and missiles, civil aeronautics remains a cash cow in the medium term through engines, maintenance, and equipment.
The company also reported ramp-up efforts on ammunition, with production up about 20% over the previous year. This point is key: the administration doesn’t just want promises, it wants physical, measurable capabilities.
Specific vulnerability to executive orders
RTX is exposed to two types of constraints. First, “hard” industrial constraints: bottlenecks, critical parts, skilled labor. Second, an image constraint: the company has already been under political pressure in recent years over the industrial performance of certain segments. In this context, any mechanism that conditions buybacks may weigh on the capital allocation strategy and on stock price support.
Northrop Grumman’s caution despite a record order book
Northrop Grumman has a record order book of approximately $95.7 billion, a sign of high visibility. However, the 2026 guidance was perceived as cautious: expected revenue of $43.5 to $44.0 billion and adjusted earnings per share of $27.40 to $27.90. The company also projects free cash flow of around $3.1 to $3.5 billion.
The logic of caution
Northrop is involved in long-cycle programs, where revenue recognition and industrial milestones are as important as demand. Conservative guidance can be a way to protect against schedule and cost uncertainties. But in the new political environment, caution is not just a matter of financial communication: it is becoming a risk reduction strategy vis-à-vis an administration that wants to penalize the gap between promise and delivery.
Immediate trade-offs
On shareholder returns, Northrop has indicated that it wants to maintain its dividend, while mentioning a pause or slowdown in buybacks for the time being. This point takes on a new dimension: if buybacks become conditional on industrial compliance, the company may be incentivized to redirect cash toward production facilities, tooling, safety stocks, and quality.
The content and mechanics of the executive order
The executive order entitled “Prioritizing the Warfighter in Defense Contracting” was issued by the White House in early January 2026. The wording is deliberately aggressive: companies deemed to be failing must not pay dividends or buy back shares until they deliver a superior product, on time and within budget.
The real target: contractual performance, not profitability
The order should be read as a means of exerting pressure on contractors’ behavior.
The administration wants to change the objective function: less management by short-term financial metrics, more management by industrial metrics. The text and its legal analyses also emphasize the idea of incorporating these requirements into future contracts and identifying “underperforming” contractors.
The mechanism is therefore twofold:
- the ability to designate “underperformance” on critical programs,
- direct consequences on capital distributions and, more broadly, on incentive compensation for executives, geared toward deliveries and increased production.
The signal sent to the market
What the administration is aiming for is chain discipline. If the stock market rewards a company that increases its earnings per share through buybacks even as it accumulates delays, the policy aims to break this logic. The message is: invest first in factories, teams, testing, and supply resilience.
The impact on companies, between factories, finance, and strategy
Reallocating cash to industrial tools
In the short term, the most likely impact is a change in priorities: more capex, more stocks of critical components, more vertical integration on certain parts, and more supplier redundancy. Lockheed has already announced high capital expenditures, and THAAD/PAC-3 production rates imply continued investment. RTX and Northrop could accelerate the same logic, if only to reduce the risk of being “labeled” as underperforming.
The rise of “schedule” risk as a financial risk
Traditionally, delays affect margins, penalties, and customer relationships. Now, they can affect the very structure of shareholder returns. In other words, industrial risk becomes valuation risk, because the ability to sustain regular buybacks is a key factor in stock market performance in the U.S. defense sector.
The balancing act with shareholders
For shareholders, the issue is not moral, it is mechanical: if share buybacks are slowed down, the trajectory of earnings per share may be less “smooth” and technical support for the share price weaker. Dividends, on the other hand, become a political variable. Investors will therefore look not only at margins, but also at production indicators: deliveries, non-compliance rates, cycle times, and ramp-up capacity.
The consequences for shareholders and competition
The winners will be “predictable” manufacturers
This new environment favors companies that can demonstrate excellence in execution. Defense is not a fashion market: customers pay high prices and demand deliveries. If a company proves that it can stick to a schedule, it protects its ability to distribute capital and potentially gains market share in future bids.
The risk of adverse effects
There is, however, a risk: if political pressure pushes for “delivery at all costs,” companies may be tempted to over-accelerate, increase costs, or create quality tensions. Yet a quality defect in a weapons system is more destructive than a quarter of lost margin. The best scenario is therefore pressure that improves discipline without compromising technical rigor.
The new equation: an industry judged on delivery, not on narrative
The episode at the end of January 2026 highlights a shift.
The 2026 results and guidance show an industry in high demand, with impressive figures: expected revenues of $77.5–80.0 billion for Lockheed, $92–93 billion for RTX, $43.5–44.0 billion for Northrop, and record order books. But the Trump administration is introducing a political rule that changes the interpretation of these figures.
The market will continue to love cash flow. It will simply ask an additional, tougher, more concrete question: “Are you really delivering?” In defense, this question is not just posturing. It is becoming the main test of credibility, and perhaps the main variable in stock market performance.
Sources
- White House, “Prioritizing the Warfighter in Defense Contracting,” January 7, 2026.
- White House, Fact Sheet associated with the order, January 7, 2026.
- Reuters, on the executive order targeting dividends and buybacks, January 7, 2026.
- Reuters, Lockheed Martin 2026 results and guidance, January 29, 2026.
- Reuters, RTX 2026 results and guidance, January 27, 2026.
- The Wall Street Journal, RTX results and backlog, January 27, 2026.
- Barron’s, Northrop Grumman 2026 guidance and backlog, January 27, 2026.
- Northrop Grumman, earnings release (investor relations), 2025 results / 2026 outlook.
- Sidley, analysis note on the executive order and its contractual implications, January 2026.
- JD Supra, legal analysis on potential integration into contracts, January 2026.
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