Beat
Backlog reached $104.7B with book-to-bill of 1.84. EPS of $7.68 beat roughly $6.82 consensus, but the upside was entirely tax-driven. A $91M GEM charge and $68M SiAW charge held segment margin to 10.6% versus about 11.2% expected.
NOCIndustrialsAerospace & Defense
Northrop Grumman
Record awards and backlog supported the demand thesis, but program charges and a tax-driven EPS raise left underlying margin progress limited.
ResultBeatGuidanceRaisedEnvironmentimproving
Latest eventQ2 202621 Jul 2026Open full analysis
Raised
2026 EPS increased $1.20 to $28.60–29.10, with roughly 60% of the raise tax-driven; segment operating income remained $4.85–5.0B and book-to-bill at least 1.25.
Acceleration
Demand visibility improved sharply, while underlying operating guidance stayed flat and margin conversion remained the key execution test.
-2.2% 1D
The initial decline reflected low-quality EPS upside and fresh charges; the shares recovered as investors focused on backlog.
Latest narrative
What the market is now debating
The print strengthened long-duration demand but confirmed that EAC volatility, not bookings, remains the limiting factor.
Market environment deltaEnvironmentimproving
Pipeline evidence converted into named international orders, missile frameworks and funded space actions, while execution remained the limiting variable.
- Demand
- International missile-defense interest progressed to identifiable orders and requests, and Golden Dome and national-security-space funding began to reach contracts.
- Supply
- Missile capacity moved from anticipatory investment to multiyear framework demand, supported by completed qualification and expanding production capacity.
- Competition
- Second-source qualification and framework positioning strengthened Northrop's role in propulsion and integrated air defense, although award conversion and program execution still matter more than headline opportunity size.
Industry-specific KPIs
What this company should be judged on
BookingsBacklogSegment marginProgram chargesFree cash flow
Latest KPI read-through
The direct read-through was to book-to-bill, backlog, Defense Systems and Space growth, segment margin and the conversion of funded awards into cash.
[AS-ME-056]Eight-event history
Guidance and narrative timeline
8
21 Jul 2026
Q2 2026
GuidanceRaisedEnvironmentimproving
Record awards and backlog supported the demand thesis, but program charges and a tax-driven EPS raise left underlying margin progress limited.
Guidance2026 EPS increased $1.20 to $28.60–29.10, with roughly 60% of the raise tax-driven; segment operating income remained $4.85–5.0B and book-to-bill at least 1.25.NarrativeThe print strengthened long-duration demand but confirmed that EAC volatility, not bookings, remains the limiting factor.
Q2 2026Full analysis→
7
21 Apr 2026
Q1 2026
GuidanceMaintainedEnvironmentmixed
Aeronautics growth and B-21 capacity funding strengthened long-term demand, but a Space charge, higher capex and withdrawal of the 2028 FCF target drove a sharp selloff.
Guidance2026 sales, operating income and FCF were held, but capex rose $200M to about $1.85B and the 2028 FCF target was removed.NarrativeThe thesis became a trade-off between a larger B-21 franchise and a later, less certain cash payoff.
Q1 2026Full analysis→
6
27 Jan 2026
Q4 2025 / FY2025
GuidanceMixed / newly framedEnvironmentimproving
Double-digit Q4 sales growth and a record backlog supported the production thesis, while a below-consensus 2026 EPS guide, higher capex and buyback pause restrained upside.
Guidance2026 sales were $43.5–44.0B, EPS $27.40–27.90, FCF $3.1–3.5B and capex about $1.65B.NarrativeThe thesis broadened to B-21 capacity expansion, making capex an investment in growth but delaying direct shareholder returns.
Q4 2025 / FY2025Full analysis→
5
21 Oct 2025
Q3 2025
GuidanceSelective raiseEnvironmentmixed
Strong Mission and Defense margins lifted EPS, but a revenue miss and full-year sales cut showed backlog conversion remained uneven.
Guidance2025 sales were cut to $41.7–41.9B from $42.05–42.25B and EPS raised to $25.65–26.05; preliminary 2026 FCF was $3.1–3.5B.NarrativeThe debate shifted from charge recurrence to whether mix-driven EPS could compensate for slower delivery growth.
Q3 2025Full analysis→
4
22 Jul 2025
Q2 2025
GuidanceSelective raiseEnvironmentimproving
A clean B-21 quarter, Defense Systems strength and an FCF raise drove a sharp relief rally, although tax and divestiture benefits lowered earnings quality.
GuidanceFull-year free cash flow increased on R&D tax treatment while sales were maintained; the second half still carried a substantial delivery ramp.NarrativeThe quarter partially restored execution credibility, while shifting attention to the quality of EAC and tax benefits.
Q2 2025Full analysis→
3
22 Apr 2025
Q1 2025
GuidanceMaintainedEnvironmentmixed
A $477M B-21 charge and a large sales miss reopened the program-risk thesis even as annual sales and cash guidance remained intact.
Guidance2025 sales and free-cash-flow ranges were held, while Aeronautics and EPS guidance fell by the charge amount.NarrativeProgram execution replaced backlog growth as the dominant valuation variable.
Q1 2025Full analysis→
2
30 Jan 2025
Q4 2024 / FY2024
GuidanceMixed / newly framedEnvironmentimproving
A record $91.5B backlog and absence of new B-21 or Sentinel charges underpinned a stable 2025 outlook, though the reaction remained muted.
Guidance2025 sales were $42.0–42.5B, segment operating income $4.65–4.80B, EPS $27.85–28.25 and FCF $2.85–3.25B.NarrativeDemand visibility strengthened, while the valuation remained hostage to B-21 and Sentinel execution.
Q4 2024 / FY2024Full analysis→
1
24 Oct 2024
Q3 2024
GuidanceMaintainedEnvironmentmixed
Solid EPS and backlog growth were offset by a revenue miss, Defense Systems timing and a lower Mission Systems margin outlook.
Guidance2024 guidance was largely held; preliminary 2025 sales growth was 3–4% and free cash flow $2.85–3.25B.NarrativeThe quarter preserved the defense-demand thesis but increased attention to the quality and timing of segment earnings.
Q3 2024Full analysis→