Northrop Grumman Corporation (NOC) Earnings

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Dec 2026upcoming

Next quarter

Expected to report Jan 26, 2027 — estimated from last year’s reporting date.

Consensus is $7.53 EPS for Dec 2026 across 5 estimates, ranging $6.14 to $8.08.

NOC Sep 2026

Reported Oct 20, 2026 · before the open

: 9.28%

: $7.22
: $7.89
: —
: $11.12B

Reported results

: $11.12B; from $10.42B
: $1.27B; from $1.24B
: 11.41%; from 11.92%
: $1.12B; from $1.10B
: $7.89; from $7.67

Highlights

EPS and expectations: Q3 diluted EPS was $7.89, 9.3% above the $7.22 consensus and up 2.9% from $7.67 a year ago.
Sales growth: Revenue rose 7% year over year to $11.12 billion and 2.2% sequentially from $10.88 billion in Q2.
Record demand: Net awards were $16.4 billion, a 1.5x book-to-bill ratio; backlog reached a record $109.6 billion, up 15% from December 2025.
Raised 2026 outlook: Northrop lifted the midpoint of segment operating income guidance by $65 million to $4.94–$5.04 billion and MTM-adjusted EPS by $0.70 to $29.35–$29.75; sales and adjusted free cash flow ranges were unchanged.
Segment growth: Aeronautics sales rose 14% to $3.58 billion and Defense Systems sales rose 12% to $2.31 billion, while Mission Systems and Space Systems each grew 2%.
Operating margins: Segment operating income increased 5% to $1.35 billion, but segment margin eased 20 basis points year over year to 12.1%; GAAP operating margin declined 50 basis points to 11.4%.
Cash generation: Adjusted free cash flow was $1.81 billion, up 44% year over year, including $371 million in proceeds from selling a B-21 test asset; operating cash flow was $1.75 billion.
2027 outlook: Management expects sales growth of 5%–7%, with segment operating income growing faster than sales and 10–20 basis points of margin expansion beyond the 2026 guidance midpoint.

Analysis

Northrop Grumman delivered a stronger quarter sequentially and beat the EPS consensus: diluted EPS of $7.89 exceeded $7.22 expected, while revenue of $11.12 billion rose 7% year over year and 2.2% from Q2. Against Q3 2025, operating income increased 2% to $1.27 billion and net earnings rose 2% to $1.12 billion; EPS was up 2.9%. Versus Q2, revenue, operating income and EPS all increased. The headline beat came with modest year-over-year GAAP earnings growth, supported by higher sales, stronger segment income and lower taxes, while lower returns on marketable securities partly offset those benefits.

The defining feature was demand visibility: $16.4 billion of awards produced 1.5x book-to-bill and a record $109.6 billion backlog. Aeronautics and Defense Systems drove sales growth, led by B-21/F-35 activity and Sentinel and missile volumes. Segment margin remained above 12%, although it slipped from a year-ago comparison that included a favorable Mission Systems contract adjustment; consolidated margin also faced a lower FAS/CAS pension adjustment. Northrop raised 2026 segment income and MTM-adjusted EPS guidance, while holding sales and cash-flow ranges steady. Management also set a 5%–7% sales-growth outlook for 2027, with further growth acceleration expected in 2028.

Awards and backlog

Bookings: Third-quarter net awards totaled $16.4 billion, producing a 1.5x book-to-bill ratio; year-to-date awards were $46.2 billion and book-to-bill was 1.45x.
Backlog: Total backlog reached $109.6 billion, 15% above December 31, 2025, comprising $50.1 billion funded and $59.5 billion unfunded. Management expects to recognize about 35% as revenue over the next 12 months and 55% over the next 24 months.
Largest awards: The quarter included $4.6 billion of restricted-program awards, $2.0 billion for Sentinel, $1.4 billion for Virginia-class submarines, $1.3 billion for F-35 and $1.0 billion for E-2.

Sales and segment execution

Aeronautics Systems: Sales grew 14% to $3.58 billion and operating income rose 24% to $377 million. F-35 production and sustainment, B-21 and B-2 sustainment contributed; margin improved to 10.5% from 9.7%.
Defense Systems: Sales increased 12% to $2.31 billion, led by a $180 million increase on Sentinel and higher tactical rocket-motor volumes. Operating income grew 7% to $250 million, while margin fell to 10.8% from 11.4% as mix shifted toward cost-type work.
Mission Systems: Sales rose 2% to $3.16 billion, but operating income fell 3% to $500 million and margin declined to 15.8% from 16.7%. The comparison included a prior-year $68 million favorable adjustment in restricted advanced microelectronics.
Space Systems: Sales increased 2% to $2.75 billion; operating income rose 5% to $312 million and margin improved to 11.3%. Restricted-space growth and more fixed-price mix helped, partly offset by lower commercial resupply sales due to launch timing.

Earnings and margins

Segment operating income increased 5% to $1.35 billion, with a 12.1% segment margin versus 12.3% a year ago. The prior-year margin benefited from the $68 million Mission Systems adjustment, while current-quarter results reflected strong execution and higher Aeronautics and Space margins. GAAP operating income rose 2% to $1.27 billion, but operating margin fell to 11.4% from 11.9%, principally because the FAS/CAS operating adjustment declined by $52 million. Net earnings reached $1.12 billion. The effective tax rate fell to 13.4% from 16.9%, principally on higher research credits; lower returns on marketable securities partly offset the operating and tax contributions to earnings.

2026 guidance

Northrop maintained full-year sales guidance at $43.75–$44.25 billion and adjusted free cash flow at $3.1–$3.5 billion. It raised segment operating income guidance to $4.94–$5.04 billion from $4.85–$5.00 billion, lifting the midpoint by $65 million; the midpoint implies an approximately 11.3% segment margin. MTM-adjusted EPS guidance rose to $29.35–$29.75 from $28.60–$29.10, a $0.70 increase at the midpoint. Management attributed the earnings increase to stronger segment performance and a lower expected tax rate, partly offset by higher corporate costs and interest expense.

Cash generation and investment

Quarterly operating cash flow was $1.75 billion, up 12% year over year, primarily on improved trade working capital. Adjusted free cash flow rose 44% to $1.81 billion, reflecting higher operating cash flow and $371 million of proceeds from the sale of a B-21 test asset. Capital expenditures were $306 million in the quarter and $775 million year to date. For 2027, management expects capital spending of about $2.1 billion, or 4.5% of sales, as it builds capacity for an accelerated B-21 production rate; its 2027 adjusted free cash flow outlook is $3.3–$3.7 billion.

Growth and technology

2027 growth: Management forecast sales growth of 5%–7%, with growth in all four segments, and expects the growth rate to accelerate further in 2028. It sees B-21, Sentinel, national-security space, munitions and international demand as key drivers; timing of appropriations, contract awards and production ramps affects the range.
B-21 and Sentinel: Management said B-21 testing and production are progressing, with capacity investment expected to translate into higher volumes later in the decade. Sentinel development continues across the missile, infrastructure and command-and-control workstreams; the program added $2.0 billion of awards this quarter.
New capabilities: Northrop reported the first fully autonomous flight of Talon Blue and highlighted Fortitude, a microelectronics product it says offers up to 3x the power and 20x the signal quality of comparable solutions. It is assessing strategic alternatives for scaling its microelectronics and quantum capabilities, including continued investment, a broader investor base or separation.

Northrop Grumman Corporation

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