Northrop Grumman Raises 2026 Earnings Guidance After Q3 Profit Beat and Record $110B Backlog

Northrop Grumman posted third-quarter 2026 adjusted earnings per share of $7.89, beating Wall Street's estimate of roughly $7.18-$7.22 by a wide margin, while revenue of $11.12 billion came in just slightly below the consensus of around $11.13-$11.14 billion. The results represented a 7% year-over-year increase in sales and a 3% gain in adjusted EPS, with total operating income of $1.27 billion exceeding the $1.20 billion estimate.

All four business segments contributed to growth. Aeronautics Systems led with a 14% revenue jump to $3.58 billion, followed by Defense Systems up 12% to $2.31 billion. Mission Systems and Space Systems each rose 2%, to $3.16 billion and $2.75 billion respectively. Operating cash flow climbed 12% year-over-year to $1.75 billion, boosted in part by a 44% increase in adjusted free cash flow tied to proceeds from the sale of equipment to a customer. Capital expenditures totaled $306 million.

The company's backlog reached a record $109.6 billion, with net awards of $16.4 billion in the quarter and a book-to-bill ratio of 1.5x. Major awards included $4.6 billion for restricted programs across 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 work, and $1.0 billion for the E-2 aircraft.

Northrop raised its full-year 2026 adjusted EPS guidance to $29.35-$29.75, up from the prior range of $28.60-$29.10, and above the analyst consensus of roughly $28.98. The company also lifted its segment operating income outlook to $4.94-$5.04 billion from $4.85-$5.00 billion. Full-year revenue guidance was held at $43.75-$44.25 billion and free cash flow guidance remained at $3.10-$3.50 billion. Management also signaled continued growth in its 2027 outlook. The stock was among the biggest movers in premarket and midday trading on October 20.