Northrop Grumman Third Quarter Earnings Raise Outlook
Northrop Grumman Third Quarter earnings raised the company's profit outlook and could shift trader flows into defense and space names.
KEY TAKEAWAYS
- Northrop raised its 2026 adjusted EPS range to $29.35 to $29.75 following the earnings release.
- Third-quarter sales were $11.12 billion and diluted EPS was $7.89.
- Record backlog of $109.6 billion and a 1.5-to-1 book-to-bill signaled sustained defense demand.
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Northrop Grumman’s Q3 earnings on Oct. 20, 2026, led the company to raise its 2026 profit outlook, citing broad defense demand, strength in space programs, and a record order backlog supporting near-term growth.
Quarter Results and Raised Outlook
Northrop Grumman reported third-quarter sales of $11.12 billion for the period ended Sept. 30, 2026, up 7% from $10.42 billion a year earlier. Diluted earnings per share were $7.89. Sales increased across all four operating segments.
The company raised its 2026 segment operating-income range to $4.94 billion to $5.04 billion and its adjusted earnings-per-share range to $29.35 to $29.75, while maintaining its sales and adjusted free-cash-flow guidance. At the midpoint of the revised operating-income range, the operating margin is about 11.3%. Management attributed the EPS increase to stronger segment performance and a lower tax rate, partly offset by higher corporate costs and interest expense. It expects higher fourth-quarter sales driven by production throughput, increased material volumes, and normal seasonality.
Record Backlog and Order Trends
Total backlog reached approximately $109.6 billion, a company record. Net awards for the quarter totaled about $16.4 billion, including $4.6 billion for restricted programs, $2.0 billion for Sentinel, $1.4 billion for Virginia-class submarines, $1.3 billion for F-35 work, and $1.0 billion for E-2 orders. The quarterly book-to-bill ratio was about 1.5, with year-to-date book-to-bill near 1.45, indicating orders ran roughly one-and-a-half times quarterly sales and contributed to backlog growth.
Management said roughly 35% of the backlog is expected to convert over the next 12 months and another 55% over the following 24 months. It identified strategic deterrence, space systems, missile production, and autonomous technologies as primary demand drivers. The company described 2027 sales growth of about 5% to 7% as an expectation rather than formal full-year guidance, based on current order flow, backlog conversion, and production ramps.
