Northrop Grumman Corporation

(New York Stock Exchange)
Back to all articles
Bullish +75

Northrop Grumman stock: Record backlog lifts 2026 profit outlook

Earnings report Guidance raised AI-generated analysis

πŸ“ˆ Northrop Grumman raised its 2026 segment operating income guidance to $4.940-$5.040 billion, up from the previous range of $4.850-$5.000 billion.

πŸ’° Third-quarter sales reached $11.122 billion, a 7% year-over-year increase driven by higher volumes in F-35, B-21, and B-2 sustainment programs.

πŸ“¦ The company's backlog hit a record $109.6 billion on September 30, fueled by net awards of $16.4 billion in the quarter.

πŸ›‘οΈ Major new contracts included $2.0 billion for the Sentinel program and $1.4 billion for Virginia-class submarines.

πŸ’Ή Diluted earnings per share increased to $7.89 from $7.67, with net earnings rising 2% to $1.124 billion.

πŸ“‰ Segment operating margin eased slightly to 12.1% from 12.3%, partially offset by a favorable prior-year contract adjustment.

πŸš€ The book-to-bill ratio stood at 1.5 times, indicating strong order intake relative to current sales.

Bullish Signals
  • Northrop Grumman raised its 2026 segment operating income guidance to $4.940-$5.040 billion, signaling confidence in converting its record backlog into revenue.
  • The company achieved a record backlog of $109.6 billion with net awards of $16.4 billion in the quarter, providing a durable pipeline for future earnings.
  • Third-quarter sales grew 7% year-over-year to $11.122 billion, driven by sustained demand across Aeronautics Systems and Defense Systems sectors.
  • Net earnings increased 2% to $1.124 billion and diluted EPS rose to $7.89, demonstrating solid profitability despite margin headwinds.
Risk Factors
  • Segment operating margin decreased to 12.1% from 12.3%, though the company attributed part of this decline to a favorable contract adjustment in the prior year.
  • Future results remain exposed to government budget fluctuations, procurement priorities, inflation, and supply-chain constraints as noted by management.
Full Analysis
Northrop Grumman reported robust third-quarter results, driving a significant increase in its backlog to a record $109.6 billion as of September 30, 2026. The company posted third-quarter sales of $11.122 billion, representing a 7% year-over-year increase, with contributions from all four operating sectors including Aeronautics Systems and Defense Systems. The defense contractor raised its full-year 2026 outlook for segment operating income to between $4.940 billion and $5.040 billion, while also increasing its MTM-adjusted EPS guidance range to $29.35 to $29.75. Despite the margin compression in the quarter due to a prior-year contract adjustment, net earnings rose 2% to $1.124 billion, reflecting strong underlying demand for its aerospace and defense capabilities. CEO Kathy Warden highlighted that the record backlog and strategic investments support durable future growth, though the company noted exposure to government budgets and supply-chain constraints. The stock traded at 472.15 euros on November 4, 2026, as investors reacted positively to the upgraded profit guidance and the substantial new awards for programs like Sentinel and the F-35.