BAESY vs LMT: Which Is the Better Buy in 2026?

Same yardstick, side by side (as of October 2026). Valuation lined up like this is most meaningful for two names in the same corner of the market, which these are. Figures are approximate; verify before investing.

Reading it: LMT is the cheaper of the two on forward earnings, but cheaper is not the same as better. Pair the valuation with growth (how far the forward P/E sits below the trailing P/E) and risk (beta) before you decide.

The metrics above tell you which is the marginally better business. The bigger risk for most people is not picking the slightly worse stock, it is over-concentrating. BAESY and LMT share themes, so owning both, or adding either to what you already hold, can quietly push a large share of your portfolio into one bet.

This is the part a generic comparison page cannot answer, because it depends on what you own. Connect your brokerage and Walnut shows your real, combined BAESY and LMT exposure, flags overlap with your existing positions, and tells you if adding one would tip you past a concentration you are comfortable with, read-only by default, with your login staying at your broker. Walnut is not an investment adviser.

BAE Systems plc is a London-listed defense, aerospace and security company and the largest defense contractor in Europe. It designs and builds a very wide range of military equipment: Typhoon combat aircraft work and a major share of the F-35 program, the Tempest/GCAP next-generation fighter, nuclear-powered submarines including the Astute and Dreadnought classes for the Royal Navy and AUKUS boats for Australia, Type 26 frigates, armored vehicles such as the Bradley and AMPV, artillery and munitions, and a large electronic systems business in the United States covering electronic warfare, flight controls and space hardware. Roughly half of group sales come from the US, through a separately governed subsidiary, BAE Systems Inc., with the UK, Saudi Arabia, Australia and European export markets making up most of the rest. For 2025 the company reported record group sales of ~£30.7bn (IFRS revenue ~£28.3bn), underlying EBIT of ~£3.3bn and underlying EPS of ~75.2p.

Full BAESY guide

Lockheed Martin is the largest defense contractor in the world, generating the vast majority of its revenue from the US government and allied militaries. It is organized into four segments: Aeronautics (home of the F-35 Lightning II, F-22, and C-130, the largest segment), Rotary and Mission Systems (Sikorsky helicopters, combat systems, radar, and sensors), Missiles and Fire Control (precision missiles, HIMARS, PAC-3 interceptors, and hypersonics), and Space (satellites, missile-defense systems, and strategic and hypersonic programs). Lockheed designs, builds, and sustains some of the most advanced and mission-critical weapons systems in the world, including the F-35, its single largest program, which generates long-tail revenue from production, upgrades, and decades of sustainment. The company makes money under long-term government contracts, with a large multi-year backlog that provides revenue visibility. It pursues hypersonics, missile defense, and space as growth areas. As a flagship defense name, Lockheed is a steady cash generator that returns substantial capital to shareholders. Headquartered in Bethesda, Maryland.

Full LMT guide

Both fit overlapping themes, but they are not interchangeable. The useful comparison is which set of drivers and risks you want exposure to.

• BAESY drivers: A record backlog and rising European and NATO budgets; Submarines and the AUKUS program.
• LMT drivers: The F-35 franchise; Rising defense budgets and munitions demand.

A faster-growing, richer-valued name usually swings harder, so it suits a longer horizon and a higher tolerance for volatility; a steadier, more cash-generative business suits a more conservative or income-minded investor. The honest test is which set of risks you could hold through a drawdown: Defense revenue depends on government budgets, so any slowdown in the UK's path to higher spending, a reprioritisation of the US budget, or a ceasefire that changes urgency in Europe could affect order intake, and the share price has already shown sensitivity to this, falling about 20% from its March 2026 high. For LMT, lockheed depends overwhelmingly on US and allied defense budgets, so spending cuts, continuing resolutions, shutdowns, or shifting priorities directly threaten revenue.

Growth-minded investors who believe the theme has years to run tend to accept the richer multiple for more upside; value-minded investors lean toward the cheaper forward earnings and steadier profile. Pick BAESY if you believe its drivers more; LMT if you believe its. Many investors hold both, but since they share themes, that is a concentrated bet, not diversification. Decide deliberately and check overlap. For the full detail, see the BAESY and LMT guides.

BAESY. The trailing multiple is computed from the second half of 2025 plus the first half of 2026 underlying EPS against a London price of roughly £18 to £19 in early October 2026, so it moves quickly with the share price. Using the raised 2026 guidance of 11% to 13% EPS growth, forward underlying EPS is roughly 83p to 85p, which puts the forward multiple near 22x. Free cash flow was ~£2.2bn in 2025 and ~£1.8bn in the first half of 2026, helped by customer advances, which can reverse as programs are delivered, so cash flow tends to be lumpy year to year.

LMT. At about $545 a share on October 16, 2026, Lockheed trades near 20 times trailing and 17 times forward earnings, about 1.6 times sales, a defense-sector multiple supported by a large backlog, predictable government revenue and free cash flow that funds a growing dividend and buybacks. Trailing net income of about $6.3 billion is already above full-year 2025's $5.0 billion, and analysts expect about $30.42 of EPS for 2026 and $32.73 for 2027. The October 22 third-quarter report (consensus about $7.52 EPS on $20.46 billion revenue) is the next checkpoint, with program charges on fixed-price contracts the main swing factor.

Headline figures (approximate, October 2026): BAESY shows group sales (fy2025) ~£30.7bn (~$40bn); IFRS revenue ~£28.3bn, h1 2026 sales ~£15.8bn, up ~9%, underlying eps (trailing 12 months) ~79p (FY2025 75.2p; H1 2026 38.9p), order backlog (30 june 2026) ~£84.0bn (~$112bn); LMT shows revenue (ttm) ~$77 billion, q2 2026 revenue ~$20.1 billion (up ~10.5% YoY), q2 2026 eps $7.94 vs ~$7.20 est., operating margin (ttm) ~12%.

BAESY and LMT are related but distinct: same themes, different businesses and risks. Neither wins in the abstract; the right pick is whichever thesis you actually believe, sized so you are not over-concentrated in one theme. Walnut can show your combined BAESY and LMT exposure against your real portfolio. It is not an investment adviser.