A month has gone by since the last earnings report for Northrop Grumman (NOC). Shares have added about 4.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Northrop Grumman due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.
Northrop Grumman Beats on Q2 Earnings & Revenues, Raises '25 EPS View
Northrop Grumman 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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -14.38% due to these changes.
VGM Scores
Currently, Northrop Grumman has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Northrop Grumman has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Northrop Grumman Corporation (NOC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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