The U.S. Department of Defense represents 85% of LMT's revenue. Therefore, the recent string of project cancellations, from the F-22's in July 2009 to the termination of the VH-71 Kestrel in October 2009, have hurt LMT's profits. Traditionally, the Democratic Party has been a strong advocate for a balanced budget; the Democratic Party taking the majority of both chambers leads one to question how deep the impact on LMT's long-run profitability.
Investors should show caution when trying to valuate LMT. A large margin of safety is necessary as LMT is a company that derives large portion of its revenues from the US government and its allies. Consequently, a souring of international relations has a doubling effect on an investor's portfolios. 1) It will taint the overall portfolio and 2) LMT holdings will be punished even more. One who invests LMT should therefore take caution to hedge such risk out.