Palantir Technologies stock soared after another strong earnings report, pushing its market cap above every defense contractor globally. However, with a price-to-earnings ratio of 150, much future growth is already priced in, while shares outstanding have risen 20% over five years. Lockheed Martin and General Dynamics trade at P/E ratios of 22 and 24 respectively, backed by record backlogs and steady long-term contracts. Lockheed Martin recently won a $35 billion contract to quadruple THAAD interceptor production, lifting its backlog to a record $230 billion and prompting management to raise full-year revenue guidance to over $80 billion with free cash flow above $7 billion. General Dynamics saw its backlog rise to $136.5 billion with a book-to-bill ratio of 1.4, driven by Columbia-class nuclear submarine contracts worth nearly $10 billion each, and raised full-year revenue guidance to $55.7 billion. Both legacy contractors return capital through buybacks and dividends, positioning them for better risk-adjusted returns than Palantir over the next decade.
