Why Is Northrop Grumman (NOC) Up 11% Since Last Earnings Report?

A month has gone by since the last earnings report for Northrop Grumman (NOC). Shares have added about 11% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Northrop Grumman due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.

Northrop Grumman Sees Growth Across Key Defense Programs

Northrop Grumman Corporation reported second-quarter 2026 adjusted earnings of $7.68 per share, which beat the Zacks Consensus Estimate of $6.84 by 12.3%. The bottom line, however, declined 5.8% from the year-ago quarter’s level of $8.15.

NOC’s Total Sales

NOC’s total sales of $10.88 billion in the second quarter beat the Zacks Consensus Estimate of $10.80 billion by 0.7%. The top line also improved 5.1% from $10.35 billion reported in the year-ago quarter.

Northrop Grumman’s Backlog Count
The company’s total backlog was $95.68 billion at the end of the second quarter compared with $95.61 billion at the end of first-quarter 2026.

NOC’s Segmental Details

Aeronautics Systems: This segment’s sales of $3.52 billion rose 13% year over year, driven by higher sales from B-21 and other restricted programs, as well as increased volume on the E-130J TACAMO program.

The unit’s operating income totaled $362 million compared with $321 million in the second quarter of 2025. Its operating profit margin remained the same at 10.3%.

Mission Systems: Sales in this segment increased 2.9% to $3.25 billion. This was driven by ramp-up on restricted airborne radar programs and higher volume on marine systems programs.

The unit’s operating income increased 13.6% to $501 million. The operating margin expanded 140 basis points (bps) to 15.4%.

Defense Systems: This segment’s sales rose 5.1% year over year to $2.09 billion. This improvement was driven by the continued ramp-up of the Sentinel program, as well as the higher volume of tactical solid rocket motor programs and the Integrated Battle Command System portfolio.

The unit’s operating income declined 38.3% year over year to $156 million. The operating margin contracted 520 bps to 9.7%.

Space Systems: Sales in this segment rose 4% to $2.75 billion. This improvement was driven by higher Commercial Resupply Service (CRS) missions as well as higher volume on the Glide Phase Interceptor (GPI) and Ground-based Midcourse Defense Weapon System (GMD WS) programs.

The segment’s operating income decreased 17% year over year to $235 million. The operating margin also contracted 150 bps to 9.5%.

Northrop Grumman’s Operational Update

Total operating income during the quarter totaled $1.10 billion, reflecting a significant decrease from $1.43 billion in the prior-year quarter.

NOC’s Financial Condition

Northrop Grumman’s cash and cash equivalents as of June 30, 2026, totaled $2.31 billion, down from $4.40 billion as of Dec. 31, 2025.

Long-term debt (net of the current portion) amounted to $14.43 billion compared with $15.16 billion as of Dec. 31, 2025.

Net cash outflow from operating activities totaled $376 million during the first six months of 2026 compared with $697 million a year ago.

Northrop Grumman’s 2026 Guidance

The company expects its revenues to be in the range of $43.75-$44.25 billion compared with its previous guidance of $43.50-$44.00 billion. The Zacks Consensus Estimate for sales is pegged at $43.96 billion, lower than the midpoint of the company’s guided range.

NOC expects adjusted earnings to be in the band of $28.60-$29.10 per share compared with its previous guidance of $27.40-$27.90 per share. The consensus estimate for earnings is pegged at $28.19 per share, above the company’s guided range.

Northrop Grumman projects to generate adjusted free cash flow in the band of $3.10-$3.50 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates revision.

VGM Scores

Currently, Northrop Grumman has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Northrop Grumman has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Northrop Grumman belongs to the Zacks Aerospace - Defense industry. Another stock from the same industry, GE Aerospace (GE), has gained 4.4% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

GE reported revenues of $12.63 billion in the last reported quarter, representing a year-over-year change of +24.5%. EPS of $2.02 for the same period compares with $1.66 a year ago.

For the current quarter, GE is expected to post earnings of $1.99 per share, indicating a change of +19.9% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.7% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for GE. Also, the stock has a VGM Score of D.

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This article originally published on Zacks Investment Research (zacks.com).

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