Defense contractor exceeds forecasts but shares slip
Northrop Grumman Corporation (NYSE:NOC) reported stronger-than-expected second-quarter results on Tuesday, beating Wall Street estimates for both earnings and revenue while increasing its full-year financial guidance.
Despite the upbeat report, shares fell 1.5% following the announcement.
Adjusted earnings came in at $7.68 per share, well above the analyst consensus estimate of $6.82. Revenue rose 5% year over year to $10.9 billion, exceeding expectations of $10.8 billion.
Company lifts full-year guidance
Northrop Grumman increased its 2026 sales outlook, forecasting revenue of between $43.75 billion and $44.25 billion, an increase of $250 million from its previous guidance. The midpoint of $44.0 billion is slightly above the analyst consensus estimate of $43.99 billion.
The company also raised its MTM-adjusted earnings per share guidance to a range of $28.60 to $29.10, an increase of $1.20 from its previous forecast.
“Northrop Grumman achieved a new record backlog, driven by robust global demand for our products,” said Kathy Warden, chair, chief executive officer and president. “We are raising our sales and EPS guidance for the year based on our confidence in our team and the demand for our technologies.”
Record backlog reflects strong demand
Net contract awards totaled approximately $20 billion during the quarter, lifting backlog to a record $105 billion.
Major awards included $7.6 billion related to the Sentinel programme, $4.3 billion for restricted programmes and $1.0 billion connected to the F-35 programme.
Revenue growth offsets margin pressure
Aeronautics Systems was the strongest-performing division, with revenue increasing 13% to $3.5 billion as production accelerated on the B-21 programme and other restricted projects.
Operating income declined 23% year over year to $1.1 billion, compared with $1.4 billion in the prior-year period, primarily because 2025 results included a $231 million gain from the divestiture of the company’s training services business.
Operating margin narrowed to 10.1% from 13.8% a year earlier.
Within Defense Systems, operating income fell 38% to $156 million after a $68 million unfavourable adjustment related to the Stand-in Attack Weapon programme.
Space Systems also recorded a $91 million unfavourable programme adjustment associated with the GEM 63XL programme.
Northrop Grumman stock price
