Record Organic Sales Aid Northrop's Q4 Earnings & Revenue Beat

Northrop Grumman Corporation NOC reported fourth-quarter 2025 adjusted earnings of $7.23 per share, which topped the Zacks Consensus Estimate of $7 by 3.3%. The bottom line also increased 13.1% from $6.39 registered in the prior-year quarter.

The company reported GAAP earnings of $9.99 per share, which improved 15.4% from the year-ago quarter’s reported number of $8.66.

The year-over-year improvement can be attributed to strong segment operating performance.

For 2025, NOC reported adjusted earnings of $26.34 per share compared with $26.08 in 2024, reflecting a year-over-year increase of 1%.

NOC’s Total Sales

NOC’s total sales of $11.71 billion in the fourth quarter beat the Zacks Consensus Estimate of $11.62 billion by 0.8%. The top line also rose 9.6% from $10.69 billion reported in the year-ago quarter. The rise can be attributed to higher sales from its Aeronautics Systems, Defense Systems, Mission Systems and Space Systems segments.

For 2025, the company recorded total sales of $41.95 billion compared with $41.03 billion in 2024, highlighting a year-over-year increase of 2.2%.

Organic sales of Northrop Grumman increased 3% to $41.8 billion in 2025 compared with $40.7 billion in 2024, which had a positive impact on the overall performance.

Northrop Grumman’s Backlog

The company’s total backlog was $95.68 billion at the end of the fourth quarter compared with $91.45 billion at the end of the prior quarter.

NOC’s Segmental Details

Aeronautics Systems: This segment’s sales of $3.92 billion rose 17.7% year over year, driven by a $274 million increase on the F-35 program, largely driven by materials volume, a $153 million jump on the E-130J TACAMO program as it ramps up, and higher volume on the B-21 and E-2 programs.

The unit’s operating income totaled $370 million compared with the operating income of $309 million in the fourth quarter of 2024. Its operating profit margin rose 10 basis points (bps) to 9.4%.

Mission Systems: Sales in this segment increased 9.7% to $3.45 billion. This was driven by the continued ramp-up of restricted airborne radar programs and higher volume on F-35, the Surface Electronic Warfare Improvement Program and international ground-based radar programs.

The unit’s operating income rose 8.7% to $510 million. The operating margin contracted 10 bps to 14.8%.

Defense Systems: This segment’s sales climbed 7.2% year over year to $2.15 billion. The improvement was driven by higher volumes tied to materials timing on the Guided Multiple Launch Rocket System, new awards within the Integrated Battle Command System portfolio, continued ramp-up of the Sentinel program and higher volume on armament programs, including military ammunition programs.

The unit’s operating income declined 1.9% year over year to $205 million. The operating margin contracted 90 bps to 9.5%.

Space Systems: Sales in this segment rose 5.5% to $2.86 billion, driven by the production ramp-up of the GEM 63 program, higher sales from new awards in the restricted space portfolio and increased volume on the Habitation and Logistics Outpost program.

The segment’s operating income surged 17.1% year over year to $322 million. The operating margin increased 120 bps to 11.3%.

Northrop Grumman’s Operational Update

Total operating income during the quarter was $1.27 billion, reflecting a 17% rise from $1.09 billion in the prior-year quarter. This increase was due to higher operating income at Aeronautics Systems and Space Systems.

NOC’s Financial Condition

Northrop Grumman’s cash and cash equivalents as of Dec. 31, 2025 totaled $4.40 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 provided by operating activities totaled $4.76 billion during 2025 compared with $4.39 million a year ago.

Northrop Grumman’s 2026 Guidance

The company issued its 2026 guidance. NOC expects its revenues in the range of $43.5-$44 billion. The Zacks Consensus Estimate for sales is pegged at $43.98 billion, which is at the higher end of the company’s guided range.

NOC now expects adjusted earnings in the band of $27.40-$27.90 per share. The Zacks Consensus Estimate for earnings stands at $28.78 per share, higher than the company’s guided range.

Northrop Grumman projects to generate adjusted free cash flow in the band of $3.1-$3.5 billion.

NOC’s Zacks Rank

NOC currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Q4 Defense Releases

General Dynamics Corporation GD is set to report fourth-quarter 2025 results on Jan. 28, before market open.

The Zacks Consensus Estimate for GD’s earnings is pegged at $4.11 per share. The consensus estimate for its sales stands at $13.80 billion, indicating year-over-year growth of 3.5%.

Lockheed Martin Corp. LMT is set to report fourth-quarter 2025 earnings on Jan. 29, before market open.

The Zacks Consensus Estimate for LMT’s earnings is pegged at $6.24 per share. The consensus estimate for its sales stands at $19.83 billion, implying year-over-year growth of 6.5%.

L3Harris Technologies LHX is set to report fourth-quarter 2025 results on Jan. 29, before market open.

The Zacks Consensus Estimate for LHX’s earnings is pegged at $2.76 per share. The consensus estimate for its sales stands at $5.80 billion, calling for year-over-year growth of 5%.

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

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