Why Is Northrop Grumman (NOC) Up 2.1% Since Last Earnings Report?

It has been about a month since the last earnings report for Northrop Grumman (NOC). Shares have added about 2.1% 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? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Northrop Grumman Corporation before we dive into how investors and analysts have reacted as of late.

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

Northrop Grumman 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.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Northrop Grumman has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a score of C on the value side, putting it in the middle 20% for value investors.

Overall, the stock has an aggregate VGM Score of B. 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.

Performance of an Industry Player

Northrop Grumman is part of the Zacks Aerospace - Defense industry. Over the past month, GE Aerospace (GE), a stock from the same industry, has gained 17.2%. The company reported its results for the quarter ended December 2025 more than a month ago.

GE reported revenues of $11.87 billion in the last reported quarter, representing a year-over-year change of +20.1%. EPS of $1.57 for the same period compares with $1.32 a year ago.

For the current quarter, GE is expected to post earnings of $1.63 per share, indicating a change of +9.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.3% over the last 30 days.

GE has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.

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

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