Northrop Grumman Beats Q3 Profit Estimates and Raises Full-Year EPS Guidance on Record Backlog

Northrop Grumman reported third-quarter 2026 adjusted earnings per share of $7.89, well above the consensus estimate of roughly $7.18 to $7.22, on sales of $11.12 billion that rose 7% year over year but came in just under the $11.13 to $11.14 billion analyst target. Total operating income reached $1.27 billion against an estimate of $1.20 billion, though the operating margin contracted 50 basis points to 11.4%. The company's backlog hit a record $109.6 billion after net awards of $16.4 billion in the quarter, producing a book-to-bill ratio of 1.5 times.

Segment results were uneven but broadly positive. Aeronautics Systems led growth with sales up 14% to $3.58 billion, followed by Defense Systems up 12% to $2.31 billion. Mission Systems and Space Systems each grew 2%, to $3.16 billion and $2.75 billion respectively. Notable awards in the quarter included $4.6 billion for restricted programs spanning Aeronautics, Space, and Mission Systems, $2.0 billion for the Sentinel program, $1.4 billion for Virginia Class submarines, $1.3 billion for F-35, and $1.0 billion for the E-2. Operating cash flow increased 12% year over year to $1.75 billion against capital expenditures of $306 million, with adjusted free cash flow jumping 44% partly on proceeds from the sale of equipment to a customer.

Northrop raised its full-year 2026 adjusted EPS guidance to $29.35 to $29.75, up from a prior range of $28.60 to $29.10, and lifted its segment operating income outlook to $4.94 to $5.04 billion from $4.85 to $5.00 billion. The full-year revenue range of $43.75 to $44.25 billion and free cash flow range of $3.10 to $3.50 billion were held unchanged. CEO Kathy Warden also provided a 2027 outlook calling for sales growth of 5% to 7%, citing the record backlog and global demand for the company's defense capabilities. Shares rose in premarket and midday trading following the report.