Will Space Unit's Performance Weigh on Northrop's Q3 Earnings?

Northrop Grumman Corporation NOC is scheduled to report third-quarter 2025 results on Oct. 21, before market open.

The company delivered a four-quarter average earnings surprise of 5.19%. Higher operating income from the Aeronautics Systems, Mission Systems and Defense Systems segments is likely to have contributed to its earnings, amid the poor performance expected from the Space Systems segment. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Aeronautics Systems is Likely to Have Boosted the Top Line

Higher sales volume, as a result of the continuous production ramp-up of B-21, E-130J TACAMO and F-35 jet programs, is likely to have boosted the third-quarter revenue performance of the Aeronautics Systems segment.

The Zacks Consensus Estimate for the segment’s revenues is pegged at $3,213.2 million, indicating a rise of 11.7% from the year-ago quarter’s figure.

Northrop Grumman Corporation Price and EPS Surprise

Northrop Grumman Corporation price-eps-surprise | Northrop Grumman Corporation Quote

Defense Systems Reflects Solid Growth Potential

Higher sales volumes from the Sentinel program, Integrated Battle Command System and military ammunition programs are likely to have aided the Defense unit’s revenue performance.

The Zacks Consensus Estimate for Defense Systems’ revenues is pegged at $2,500.9 million, indicating an increase of 20% from the year-ago quarter’s number.

Mission Systems to Remain Solid

Higher volume on marine systems, international ground-based radar, along with electronic warfare (EW) programs, are expected to have favorably impacted Mission Systems’ revenue performance.

The Zacks Consensus Estimate for Mission Systems’ third-quarter revenues is pegged at $3,004.5 million, indicating growth of 6.4% from the year-ago quarter’s actual.

Space Systems to Reflect Dismal Performance

The Space Systems segment’s revenues are likely to have been adversely impacted primarily due to the wind-down of the company’s work on the restricted space and NGI programs, as well as lower volume on Space Development Agency satellite programs.

The Zacks Consensus Estimate for Space Systems’ revenues is pegged at $2,509.9 million, implying a decrease of 12.5% from the year-ago quarter’s number.

Backlog Projections

Our model estimates NOC’s third-quarter backlog to increase 28.3% year over year to $108.80 billion.

Q3 Estimates

With three of NOC’s segments likely to report a year-over-year improvement in sales, one can be optimistic about its top-line results. However, the decline in the Space Systems segment is likely to have had some adverse impact on its overall revenue performance.

The Zacks Consensus Estimate for sales is pegged at $10.70 billion, indicating an improvement of 7% from the prior-year figure.

Higher operating income from the Aeronautics Systems, Mission Systems and Defense Systems segments is likely to have aided its third-quarter 2025 earnings performance.

However, lower operating income at Space Systems, corporate unallocated expenses of $100 million, as well as a higher estimated tax rate, are projected to hurt NOC’s overall bottom-line results.

The Zacks Consensus Estimate for NOC’s third-quarter earnings is pegged at $6.47 per share, indicating a decline of 7.6% from the prior-year figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for NOC this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here, as you will see below.

Earnings ESP: NOC has an Earnings ESP of -3.36%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: NOC currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Below, we have mentioned players from the same industry that have the right combination of elements to beat on earnings in the upcoming releases.

GE Aerospace GE is set to report third-quarter 2025 earnings on Oct. 21, 2025, before market open. It has an Earnings ESP of +2.01% and a Zacks Rank of 3 at present.

The Zacks Consensus Estimate for GE’s earnings is pegged at $1.46 per share, indicating year-over-year growth of 27%. The consensus estimate for its sales is pegged at $10.34 billion, indicating year-over-year growth of 15.6%.

RTX Corporation RTX is set to report its third-quarter 2025 results on Oct. 21, before market open. It has an Earnings ESP of +1.53% and a Zacks Rank of 3 at present.

The Zacks Consensus Estimate for RTX’s earnings is pegged at $1.42 per share. The consensus estimate for its sales is pegged at $21.48 billion, indicating year-over-year growth of 6.9%.

Embraer ERJ is expected to report its third-quarter results soon. It has an Earnings ESP of +5.00% and a Zacks Rank of 3 at present.

The Zacks Consensus Estimate for ERJ’s earnings is pegged at 67 cents per share. The consensus estimate for its sales is pegged at $2.07 billion, indicating year-over-year growth of 22.2%.

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This article originally published on Zacks Investment Research (zacks.com).

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