Northrop Grumman (NOC) Earnings Date & Reports

Key Takeaways

• Northrop Grumman reported third quarter 2026 diluted earnings per share (EPS) of $7.89, roughly 9.6% above the analyst consensus estimate of about $7.20.
• Sales reached $11.1 billion, up 7% year over year and in line with Wall Street estimates of approximately $11.15 billion.
• The company posted a record backlog of $110 billion, up 20% from a year earlier, supported by a quarterly book-to-bill ratio of 1.5x.
• Northrop raised its full-year 2026 guidance for segment operating income and MTM-adjusted EPS (mark-to-market adjusted earnings per share), while keeping its sales and adjusted free cash flow outlook unchanged.
• Shares rose in the session following the release, with investors rewarding the earnings beat and improved profitability outlook.

Earnings Context and Why It Matters

Northrop Grumman's third quarter 2026 results arrived at a pivotal moment for the defense sector, where strong government demand, rising allied budgets, and growing emphasis on space and missile defense have driven a multi-year expansion in order activity. As one of the largest U.S. defense contractors, the company's results serve as a bellwether for spending trends across aeronautics, defense systems, mission systems, and space. With a record backlog and accelerating program execution across franchises such as the B-21 Raider and Sentinel, this report offered investors a direct read on whether robust demand is translating into stronger margins and earnings momentum heading into 2027.

Reported Results

Northrop Grumman delivered third quarter 2026 sales of $11.1 billion, a 7% increase from the prior year and essentially in line with consensus estimates of about $11.15 billion. Growth was broad-based, with higher volumes across all four segments. Diluted EPS came in at $7.89, up 3% year over year and roughly 9.6% above the analyst consensus of approximately $7.20.

Profitability showed notable strength, with segment operating income up 5% and a segment operating margin rate of 12.1%. Aeronautics Systems led the way with 14% sales growth and a 10.5% margin, while Defense Systems sales rose 12% to $2.3 billion. Mission Systems reported sales of $3.16 billion with a 15.8% margin, and Space Systems grew 2% to $2.75 billion with an 11.3% margin. Adjusted free cash flow reached $1.8 billion, up more than 40% year over year, aided by working capital improvements and proceeds from the sale of a B-21 test asset.

The quarter's standout metric was backlog, which climbed to a record $110 billion, up 20% from a year ago, driven by more than $16 billion in bookings and a book-to-bill ratio of 1.5x. Management raised its 2026 guidance, lifting segment operating income to $4.94 billion to $5.04 billion (from $4.85 billion to $5.00 billion) and MTM-adjusted EPS to $29.35 to $29.75 (from $28.60 to $29.10), while reaffirming sales guidance of $43.75 billion to $44.25 billion.

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Market Reaction and Investor Sentiment

Investors responded favorably to the report, with Northrop Grumman shares trading higher in the session following the release. The positive reaction reflected the combination of an earnings beat, a record backlog, and a guidance raise that exceeded consensus expectations. Sentiment was further supported by the company's confident tone around execution on key programs, including progress on Sentinel and the B-21 Raider, as well as initial 2027 guidance that pointed to continued sales growth and margin expansion. The results reinforced a broader theme across the defense industry, where robust order activity and improving profitability have outweighed lingering concerns about budget uncertainty and elevated capital investment.

Forward Outlook and Key Factors to Monitor

Looking ahead, Northrop Grumman provided an initial 2027 outlook that calls for sales growth of 5% to 7%, segment operating margin rate expansion of 10 to 20 basis points (a basis point is one-hundredth of a percentage point), and adjusted free cash flow of $3.3 billion to $3.7 billion. Management indicated further growth acceleration is expected in 2028 as the company ramps production on franchise programs.

Investors should monitor several factors in the coming quarters. Program execution on Sentinel and the B-21 Raider remains a central focus, given the scale and complexity of these development efforts. Capital expenditures, planned at roughly $2.1 billion for 2027, reflect ongoing investment in manufacturing capacity and could pressure near-term cash flow even as they support long-term growth.

Additional catalysts include the cadence of space system launches, particularly the deployment of satellites supporting the Proliferated Warfighter Space Architecture, and the trajectory of international sales, which management aims to double by 2031. Budget dynamics in Washington, including the resolution of the continuing resolution and final appropriations, will also shape the demand environment, though management noted that its portfolio of priority programs is largely insulated from incremental funding uncertainty.

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