The Northrop Grumman outlook improved on October 20, 2026, as the aerospace and defense company raised its full-year earnings guidance after reporting higher third-quarter profit and sales. Management now expects 2026 MTM-adjusted earnings of $29.35–$29.75 per share, while keeping its annual sales forecast unchanged.
Key Takeaways
- The midpoint of full-year adjusted earnings guidance increased by $0.70 per share.
- Quarterly sales grew 6.7%, but operating profit increased more slowly as margins narrowed.
- Shares traded 3.9% higher at $530.20 in a premarket snapshot, not a closing price.
Table of Contents
- Northrop Grumman outlook raises profit targets, not sales
- Quarterly earnings rise despite narrower margins
- Aircraft and Sentinel programs lead growth
- Conclusion
Northrop Grumman outlook raises profit targets, not sales
Northrop Grumman’s third-quarter 2026 earnings release set out higher forecasts for MTM-adjusted earnings per share and segment operating income, both non-GAAP measures. The sales range remained $43.75 billion–$44.25 billion, meaning the revised outlook anticipates more profit without increasing the annual revenue target.
The midpoint of segment operating income guidance rose by $65 million. Management’s forecasts remain expectations rather than completed results, and the company cautioned that they do not incorporate the effects of a prolonged government shutdown, spending limits or other spending cuts.
| Item | Details |
|---|---|
| 2026 MTM-adjusted EPS | $29.35–$29.75; previously $28.60–$29.10 |
| 2026 segment operating income | $4.940 billion–$5.040 billion; previously $4.850 billion–$5.000 billion |
| 2026 sales | $43.75 billion–$44.25 billion; unchanged |
| 2026 adjusted free cash flow | $3.1 billion–$3.5 billion |
Quarterly earnings rise despite narrower margins
For the three months ended September 30, 2026, net earnings increased to $1.124 billion from $1.100 billion a year earlier. Diluted earnings per share rose to $7.89 from $7.67, while sales increased to $11.122 billion from $10.423 billion.
Operating income rose 2% to $1.269 billion, but operating margin declined to 11.4% from 11.9%. Northrop Grumman attributed that margin decline principally to a smaller adjustment between financial-reporting and government-contract pension accounting.
A lower tax rate helped support net earnings. The effective income tax rate fell to 13.4% from 16.9%, principally because of higher research credits. Pretax earnings, by contrast, declined to $1.298 billion from $1.323 billion.
Aircraft and Sentinel programs lead growth
Sales increased across all four business segments. Aeronautics Systems led with 14% growth, supported by F-35 activity, higher B-21 sales and increased B-2 sustainment volume. Defense Systems sales rose 12%, including a $180 million increase on Sentinel as that program continued to ramp up.
Mission Systems and Space Systems each recorded 2% sales growth. Space growth was partly offset by $136 million of lower Commercial Resupply Service sales because of launch timing.
Net awards totaled $16.4 billion, exceeding quarterly sales and bringing backlog to $109.6 billion. Major awards included $2.0 billion for Sentinel and $1.4 billion for Virginia Class submarines.
Conclusion
Fourth-quarter performance will determine whether Northrop Grumman meets its higher annual profit targets. The key benchmark is the combination of an unchanged sales forecast and increased expected earnings, subject to management’s government-funding assumptions.
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