Moody's upgraded Lockheed Martin Corp.'s senior unsecured rating to A3 from Baa1, with a stable outlook, over its expanding revenues, operating margins, free cash flow and portfolio since it acquired Sikorsky Aircraft Corp. in November 2015.

The rating agency said it expected the company's financial performance to continue to improve. Moody's said the ratings upgrade also reflects the company's lower financial leverage and its projection of further deleveraging through 2021, as upcoming debt maturities are repaid.

Moody's believes that the aerospace company will maintain its top position in the global aerospace and defense industry but does not expect its debt-to-EBITDA ratio to improve proportionally to the decline in its funded debt, due to a sustained high under-funding of its pension plans. The rating agency expects the company's debt-to-EBITDA ratio to move toward 2.5x by the end of 2021.

Moody's withdrew Lockheed Martin's Baa1 issuer rating.