Northrop Grumman Beats on Q2 Earnings & Revenues, Raises '25 EPS View

Northrop Grumman Corporation NOC reported second-quarter 2025 adjusted earnings of $7.11 per share, which beat the Zacks Consensus Estimate of $6.71 by 6%.

Including one-time items, the company reported GAAP earnings of $8.15 per share, which improved 28% from the year-ago quarter’s reported number of $6.36.

The year-over-year improvement can be attributed to strong segment operating performance and a net after-tax benefit related to the divestiture of the company’s training services business.

NOC’s Total Sales

NOC’s total sales of $10.35 billion in the second quarter beat the Zacks Consensus Estimate of $10.06 billion by 2.9%. The top line also rose 1.3% from $10.22 billion reported in the year-ago quarter. The improvement can be attributed to higher sales from its Aeronautics Systems, Defense Systems and Mission Systems segments.

Northrop Grumman’s Backlog Count

The company’s total backlog was $89.74 billion at the end of the second quarter compared with $92.80 billion at the end of the first quarter of 2025.

Our model projected a backlog worth $115.31 billion for the second quarter of 2025.

NOC’s Segmental Details

Aeronautics Systems: This segment’s sales of $3.11 billion increased 2% year over year, driven by the higher volume of the B-21 program and the ramp-up of the E-130J TACAMO program.

The unit’s operating income totaled $321 million compared with the operating income of $312 million in the second quarter of 2024. Its operating profit margin also improved 10 basis points (bps) to 10.3%.

Mission Systems: Sales in this segment increased 14% to $3.16 billion. This was driven by the favorable timing of a restricted award, higher volumes from marine systems, international ground-based radar, advanced technologies and navigation systems programs.

The unit’s operating income rose 22% to $441 million. The operating margin expanded 100 bps to 14%.

Defense Systems: This segment’s sales jumped 7% year over year to $1.99 billion. The improvement was driven by higher sales from the Sentinel program and military ammunition programs.

The unit’s operating income improved 32% year over year to $253 million. The operating margin expanded 240 bps to 12.7%.

Space Systems: Sales in this segment declined 12% to $2.65 billion due to the winding down of work on the restricted space and Next Generation Interceptor programs, as well as lower volumes from Space Development Agency satellite programs.

The segment’s operating income decreased 8% year over year to $280 million. However, the operating margin expanded 50 bps to 10.6%.

Northrop Grumman’s Operational Update

Total operating income during the quarter totaled $1.43 billion, reflecting a significant rise from $1.09 billion in the prior-year quarter. This increase was due to higher operating income at Aeronautics Systems, Mission Systems and Defense Systems.

NOC’s Financial Condition

Northrop Grumman’s cash and cash equivalents as of June 30, 2025 totaled $1.90 billion, down from $4.35 billion as of Dec. 31, 2024.

Long-term debt (net of the current portion) amounted to $15.16 billion compared with $14.69 billion as of Dec. 31, 2024.

Net cash outflow from operating activities totaled $697 million during the first six months of 2025 against cash inflow of $719 million a year ago.

Northrop Grumman’s 2025 Guidance

The company updated its 2025 guidance. NOC now expects its revenues in the range of $42.05-$42.25 billion, narrower than the previous guidance in the band of $42.00-$42.50 billion. The Zacks Consensus Estimate for sales is pegged at $41.98 billion, lower than the company’s newly guided range.

NOC now expects adjusted earnings in the band of $25.00-$25.40 per share, higher than its earlier guided band of $24.95-$25.35. The Zacks Consensus Estimate for earnings is pegged at $25.13 per share, below the midpoint of the company’s guided range.

Northrop Grumman now projects to generate adjusted free cash flow in the band of $3.05-$3.35 billion, higher from the previous range of $2.85-$3.25 billion.

NOC’s Zacks Rank

NOC currently has a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A Recent Defense Release

AAR Corp. AIR reported fourth-quarter fiscal 2025 adjusted earnings of $1.16 per share, which surpassed the Zacks Consensus Estimate of $1.00 by 16%. The bottom line also improved 31.8% from the year-ago quarter’s level of 88 cents.

AAR generated net sales of $754.5 million. The reported figure surpassed the Zacks Consensus Estimate of $691 million by 9.2%. The figure also increased 14.9% from $656.5 million recorded in the year-ago quarter.

Upcoming Q1 Defense Releases

General Dynamics Corporation GD is set to report second-quarter 2025 results on July 23, before market open.

The Zacks Consensus Estimate for GD’s earnings is pegged at $3.59 per share. The consensus estimate for its sales is pegged at $12.35 billion, indicating year-over-year growth of 3.1%.

The Boeing Company BA is set to report second-quarter 2025 earnings on July 29, before market open.

The Zacks Consensus Estimate for BA’s loss is pegged at $1.47 per share. The consensus estimate for its sales is pegged at $21.93 billion, implying year-over-year growth of 30%.

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