Northrop Grumman (NOC) — Company Research

Last Updated: 20 Oct 2026

Northrop Grumman (NYSE: NOC) is a US defence prime and the sole contractor on two of the Pentagon’s largest strategic programmes, the B-21 Raider stealth bomber and the Sentinel intercontinental ballistic missile. It also makes solid rocket motors, radars, electronic warfare systems, satellites and missile-defence interceptors. FY2025 sales were $41.95bn (+2.2%), with GAAP EPS of $29.08 and MTM-adjusted EPS of $26.34. In 2026 sales growth has picked up, backlog reached a record $104.7bn at 30 Jun 2026, and in July management raised full-year guidance to sales of $43.75–44.25bn and MTM-adjusted EPS of $28.60–29.10. The shares, however, closed at $510.87 on 19 Oct 2026, about 34% below their 52-week high. This refreshed report covers results through Q2 2026, the balance sheet at 30 Jun 2026, valuation and risks, using company releases and SEC filings only. Q3 2026 results are due before the US market opens on 20 Oct 2026 and are not reflected here.

1. Company Snapshot

Field	Value
Ticker / Exchange	NOC / NYSE
CEO / Leadership	Kathy Warden, Chair, CEO & President; John Greene, CFO (joined 07 Jan 2026, previously CFO of Discover Financial)
Sector	Defence & aerospace — military aircraft, strategic and tactical missiles, solid rocket motors, mission systems, space
Employees	~95,000 at 31 Dec 2025, with ~7,500 hired during 2025 (FY2025 10-K)
Market cap	~$72.6bn ($510.87 at 19 Oct 2026 close × 142.06m shares at 16 Jul 2026)
FY2025 Revenue	$41,954m sales (+2.2%)
FY2025 net earnings	$4,182m (GAAP EPS $29.08; MTM-adjusted EPS $26.34, excluding a pension mark-to-market benefit)
Backlog	Record $104.7bn at 30 Jun 2026, up from $95.7bn at 31 Dec 2025
2026 guidance	Sales $43.75–44.25bn, MTM-adjusted EPS $28.60–29.10, adjusted free cash flow $3.1–3.5bn (sales and EPS raised 21 Jul 2026)
Dividend	$2.47 quarterly (raised 7% in May 2026), $9.88 annualised, ~1.9% yield at $510.87
US government share of sales	84% in 2025 (FY2025 10-K)

2. Bull & Bear Case

Bull Case

• Record backlog: Backlog reached $104.7bn at 30 Jun 2026, up from $95.7bn at the end of 2025, after Q2 net awards of $20.0bn that included $7.6bn for Sentinel and $4.3bn of restricted work.
• Sole-source strategic franchises: Northrop is the only prime on both the B-21 bomber and the Sentinel ICBM. The Air Force agreed in Feb 2026 to raise B-21 production capacity by 25%, and an inert Sentinel missile was fully stacked at Vandenberg on 14 Sep 2026 ahead of a 2027 flight test.
• Rocket motor and munitions demand: Framework agreements worth over $3bn, signed on 03 Aug 2026, cover PAC-3 MSE solid rocket motors and THAAD components over seven years. A $4.84bn CIRCM full-rate production IDIQ followed in Sep 2026.
• Raised earnings outlook: 2026 MTM-adjusted EPS guidance was raised by $1.20 to $28.60–29.10 in July, against $26.34 in 2025, and sales guidance rose by $250m.
• Shareholder returns: The quarterly dividend rose 7% to $2.47 in May 2026, and $2.5bn remained under the $3.0bn buyback authorisation at 30 Jun 2026.

Bear Case

• B-21 fixed-price losses: Northrop has recognised about $2.0bn of cumulative losses on the B-21 low-rate initial production lots, with a $1.0bn loss accrual still on the balance sheet at 30 Jun 2026. A further $157m net unfavourable adjustment was booked in Q1 2026.
• Recurring programme charges: 2026 has brought unfavourable estimate changes of $68m on SiAW and $71m and $91m on the GEM 63XL booster. Q2 2026 operating income fell 23% to $1,096m and the operating margin was 10.1%.
• Weak first-half cash flow: Adjusted free cash flow was −$845m in H1 2026, and full-year guidance of $3.1–3.5bn is roughly in line with 2025’s $3.31bn despite higher sales.
• Modest growth record: Sales grew at about 4.1% a year between FY2021 and FY2025, and only 2.2% in FY2025.
• Share price drawdown and insider selling: At $510.87 the shares are about 34% below the 52-week high of $774.00. The CEO sold 30,000 shares in Jan–Feb 2026, and no open-market insider purchases were found this year.

3. Business Segments

Northrop reports four segments. Percentages use FY2025 total sales of $41,954m. Segment sales include intersegment work, which is eliminated on consolidation (−$2,317m in FY2025), so the percentages add up to more than 100%.

Segment	% of revenue	What it is
Aeronautics Systems	31.0% ($12,992m)	Military aircraft: B-21 Raider, B-2 sustainment, E-130J TACAMO, F-35 centre fuselages, E-2D Hawkeye, Triton and Global Hawk; about 40% restricted work.
Mission Systems	29.8% ($12,506m)	Radars (F-35, SABR, G/ATOR, MESA), electronic warfare, infrared countermeasures, communications, microelectronics, and submarine power and propulsion.
Space Systems	25.7% ($10,771m)	Satellites (SDA layers, Next-Gen OPIR), missile-defence interceptors (Glide Phase Interceptor, GMD), GEM 63 boosters, SLS and Trident II motors, Cygnus; about 45% restricted.
Defense Systems	19.1% ($8,002m)	Sentinel ICBM, IBCS air and missile defence command and control, tactical rocket motors, AARGM-ER and SiAW missiles, ammunition and precision guidance kits.

Since 01 Jan 2025 the strike and surveillance aircraft business has sat in Aeronautics rather than Defense. Q2 2026 segment sales were Aeronautics $3,519m (+13%), Mission $3,250m (+3%), Space $2,753m (+4%) and Defense $2,093m (+5%).

4. Business Model & Moat

How it makes money. About 84% of 2025 sales came from the US government, with the rest from allied governments and commercial space customers. Roughly half of sales come from fixed-price contracts, where Northrop absorbs cost overruns, and the rest from cost-reimbursable work, where profit is a fee on allowable costs. Profit is booked over the life of each contract using estimates at completion, so quarterly “EAC adjustments” can move margins up or down.

Classified and strategic work. A large share of the business is restricted (classified), including about 40% of Aeronautics and about 45% of Space. These programmes, together with the nuclear-deterrent work on B-21 and Sentinel, require security clearances, specialised facilities and decades of programme history that new entrants find hard to replicate.

Moat and trade-off. Sole-prime positions on the B-21 and Sentinel provide multi-decade production and sustainment revenue. The trade-off is fixed-price risk on early production lots, which has already cost about $2.0bn of B-21 losses, and heavy dependence on a single customer and its budget process.

5. Financial Health

Annual figures are from Northrop’s Q4 earnings releases and SEC XBRL filings. Long-term debt is the non-current balance-sheet amount at year end.

Fiscal Year	Revenue ($m)	YoY %	GAAP EPS	Adjusted EPS	Dividend/share	Long-term debt (YE)
FY2021	$35,667m	−3.1%	$43.54	$32.59†	$6.16	$12,777m
FY2022	$36,602m	+2.6%	$31.47	$25.54†	$6.76	$11,805m
FY2023	$39,290m	+7.3%	$13.53	$15.61†	$7.34	$13,786m
FY2024	$41,033m	+4.4%	$28.34	$26.08†	$8.05	$14,692m
FY2025	$41,954m	+2.2%	$29.08	$26.34†	$8.99	$15,162m

† Adjusted EPS is the company’s MTM-adjusted EPS, which excludes the pension and retiree-benefit mark-to-market adjustment and its tax effect. FY2021 MTM-adjusted EPS of $32.59 still includes the gain on the sale of the IT services business; the company’s transaction-adjusted EPS, which also excludes it, was $25.63. FY2023 GAAP EPS was cut by a $1.56bn pre-tax B-21 charge. FY2021 growth is measured against FY2020 sales of $36,799m. Dividends are declared per share as reported in SEC XBRL.

Quarterly progression, most recent first, with the FY2025 total in bold:

Quarter / Half	Revenue	Adjusted EPS	GAAP EPS
Q2 2026	$10,876m	$7.68‡	$7.68
Q1 2026	$9,881m	$6.14‡	$6.14
Q4 2025	$11,712m	$7.23	$9.99
Q3 2025	$10,423m	$7.67‡	$7.67
Q2 2025	$10,351m	$8.15‡	$8.15
Q1 2025	$9,468m	$3.32‡	$3.32
FY2025 total	$41,954m	$26.34	$29.08

‡ The pension mark-to-market adjustment is booked only in Q4, so MTM-adjusted EPS equals GAAP EPS in Q1–Q3. Q4 2025 GAAP EPS included a $394m after-tax mark-to-market benefit. Q1 2025 included a $477m B-21 loss provision, and Q2 2025 included a $1.04 per share gain on the sale of the training services business. Q2 2026 benefited from a 6.3% tax rate after uncertain tax positions were remeasured. Over the four quarters to 30 Jun 2026, sales were ~$42.9bn and GAAP EPS ~$31.48 (~$28.72 on an MTM-adjusted basis).

Cash flow and balance sheet. All figures are from SEC XBRL filings and Northrop’s earnings releases (FY2025 10-K and Q2 2026 10-Q).

• Operating cash flow: $4,757m in FY2025; ~$5,078m trailing twelve months to 30 Jun 2026. Cash flow is heavily weighted to the second half; H1 2026 operating cash flow was −$376m.
• Capital expenditure: $1,450m in FY2025, giving free cash flow of $3,307m; ~$1,432m trailing twelve months, giving TTM free cash flow of ~$3,646m.
• Depreciation & amortisation: $1,472m in FY2025; ~$1,524m trailing twelve months.
• Debt at 30 Jun 2026: $14,428m of non-current long-term debt plus $763m current portion, ~$15,191m in total.
• Cash at 30 Jun 2026: cash and equivalents $2,307m; no short-term marketable securities are reported.

6. Valuation

Raw metrics, October 2026. Not opinions on whether the stock is cheap or expensive.

Metric	Value
Market cap	~$72.6bn (price $510.87 at 19 Oct 2026 close × 142.06m shares)
Enterprise value	~$85.5bn (market cap ~$72.6bn + total debt ~$15.2bn − cash ~$2.3bn per 30 Jun 2026 balance sheet)
Trailing P/E (GAAP)	~16.2x ($510.87 / TTM GAAP EPS ~$31.48, Q3 2025–Q2 2026, which includes the Q4 2025 pension mark-to-market benefit). On TTM MTM-adjusted EPS of ~$28.72 it is ~17.8x
P/E (forward)	~17.7x ($510.87 / $28.85, the midpoint of 2026 MTM-adjusted EPS guidance of $28.60–29.10)
P/S (TTM)	~1.69x ($72.6bn / ~$42.9bn TTM sales)
EV/EBITDA (TTM)	~14.0x (EV ~$85.5bn / TTM EBITDA ~$6.12bn; EBITDA = operating income ~$4.60bn + D&A ~$1.52bn from the cash flow statement). On FY2025 EBITDA of ~$5.98bn ($4.51bn + $1.47bn) it is ~14.3x
P/FCF	~21.9x (market cap ~$72.6bn / FY2025 FCF ~$3.31bn; FCF = operating CF $4.76bn − capex $1.45bn per FY2025 cash flow statement). On TTM FCF of ~$3.65bn it is ~19.9x
Dividend yield	~1.9% ($9.88 annualised / $510.87)
52-week high	$774.00
52-week low	$470.06
Short interest (% of float)	~1.61% (2.28m shares at the 30 Sep 2026 settlement, +1.3% versus 15 Sep)
Days to cover	~2.6 days

7. What Are They Building

Northrop’s investment is concentrated on the nuclear-deterrent programmes, solid rocket motor capacity and space-based missile defence.

• B-21 Raider: The bomber is in flight test and demonstrated aerial refuelling in Apr 2026. In Feb 2026 the Air Force agreed to raise annual production capacity by 25% using $4.5bn of reconciliation funding, and the first delivery to Ellsworth Air Force Base is planned for 2027. The low-rate production options are largely fixed-price and run to about 2030.
• Sentinel ICBM: After a critical Nunn-McCurdy breach in 2024, the programme is being restructured with a new modular silo design. Northrop received a $7.6bn award in Q2 2026, the first flight-test critical design review is complete, and an inert missile was stacked at Vandenberg on 14 Sep 2026. A first flight test is planned for 2027, and the Air Force expects a new Milestone B by the end of 2026.
• Solid rocket motors: Northrop says it has invested over $1bn in solid rocket motor production since 2019, doubling capacity in Utah. The $3bn agreements of 03 Aug 2026 cover $2bn of PAC-3 MSE motors and $1bn of THAAD components over seven years.
• Golden Dome and missile defence: Northrop is funding its own space-based interceptor demonstration with Apex for 2027, and the Golden Dome programme lead said on 11 Aug 2026 that participating firms had completed a first round of key interceptor tests. It also received a $0.8bn Glide Phase Interceptor award in Q2 2026.
• Aircraft and sensors: The E-130J TACAMO programme ($3.5bn Navy contract, Dec 2024) is ramping, CIRCM aircraft protection moved to a $4.84bn full-rate production IDIQ in Sep 2026, and a GHOST-R reconnaissance satellite prototype award followed on 21 Sep 2026.

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8. Competitive Landscape

Northrop competes with Lockheed Martin, RTX, General Dynamics, L3Harris and Boeing, as well as newer venture-backed entrants, for US and allied defence budgets. Several peers are also partners; Northrop supplies F-35 fuselages and sensors to Lockheed and rocket motors for Lockheed’s PAC-3. Market caps are mid-Oct 2026 values from MarketBeat stock pages, and metrics come from each company’s FY2025 results release.

Peer	Market cap (Oct 2026)	Key 2025 metric
RTX Corporation (RTX)	~$259.5bn	FY2025 sales $88.6bn, per RTX FY2025 results release
Lockheed Martin (LMT)	~$125.8bn	FY2025 net sales $75.0bn, per Lockheed Q4 2025 release
General Dynamics (GD)	~$93.1bn	FY2025 revenue $52.6bn, diluted EPS $15.45, per GD Q4 2025 release
L3Harris Technologies (LHX)	~$45.5bn	FY2025 revenue $21.9bn, per L3Harris Q4 2025 release

9. Leadership & Insider Activity

Kathy Warden is Chair, Chief Executive Officer and President. John Greene became CFO on 07 Jan 2026, replacing Ken Crews, and Adm. Christopher Grady joined the board on 13 Feb 2026. Form 4 filings show no open-market insider purchases in 2026. Several filings report weighted average prices, so values are estimates.

Name	Date	Type	Shares	Price	Value	Plan Type
Mark Welsh III (Director)	03 Aug 2026	Sale	95	~$547.53	~$52,000	Rule 10b5-1 plan (adopted 23 Aug 2025)
Kathryn Simpson (CVP & General Counsel)	02 Mar 2026	Sale	873	$745.00	~$650,000	Rule 10b5-1 plan (adopted 28 Feb 2025)
Roshan Roeder (President, Mission Systems)	27 Feb 2026	Sale	1,754	$720.00	~$1.26m	Rule 10b5-1 plan (adopted 30 Oct 2025)
Benjamin Davies (President, Defense Systems)	18 Feb 2026	Option exercise and sale	2,189	$719.61	~$1.58m	Plan status not confirmed
Kathy Warden (Chair, CEO & President)	06 Feb 2026	Sale	20,000	~$705.84–711.14	~$14.2m	No 10b5-1 plan indicated on Form 4
Kathy Warden (Chair, CEO & President)	05 Jan 2026	Sale	10,000	$604.50	~$6.05m	Plan status not confirmed

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10. Key Risks

• B-21 production losses (Financial): The B-21 low-rate production lots are largely fixed-price. Northrop has recognised about $2.0bn of cumulative losses, including $1.56bn in Q4 2023 and $477m in Q1 2025, and still carried a $1.0bn loss accrual at 30 Jun 2026. Cost growth on the remaining lots would add to these losses.
• Fixed-price development and estimate changes (Operational): About half of sales are fixed-price. 2026 has already brought unfavourable estimate changes on SiAW and the GEM 63XL booster, and AARGM-ER production costs have grown.
• Sentinel restructure (Programme): Sentinel breached Nunn-McCurdy cost limits in 2024 and is being restructured, with a new Milestone B expected by the end of 2026. Further changes to scope, schedule or contract terms could affect the programme’s economics.
• US budget dependence (Macro): The US government accounted for 84% of 2025 sales. Continuing resolutions, shutdowns, debt-ceiling disputes, stop-work orders and terminations for convenience can delay or reduce funding.
• Contract terms on capital returns (Regulatory): The 10-K warns that new government contract terms could restrict buybacks and dividends at contractors judged to be underperforming.
• Pension, tax and supply chain (Financial): Pension mark-to-market adjustments swing GAAP earnings each Q4, a 2026 tax remeasurement lifted Q2 earnings and may not recur, and inflation, supplier performance and cleared-workforce availability affect costs.

11. Recent Developments

• 02 Oct 2026 — FORTITUDE chip announced. Northrop announced a multilayer microelectronics chip under the FORTITUDE name.
• 21 Sep 2026 — GHOST-R satellite award. The Space Force and Defense Innovation Unit selected Northrop and True Anomaly for GHOST-R reconnaissance satellite prototypes; the value was not disclosed.
• 17 Sep 2026 — Q3 date set. Northrop said it would report Q3 2026 results on 20 Oct before the market opens, with a webcast at 9:30am ET.
• 14 Sep 2026 — Sentinel missile stacked. The Air Force and Northrop assembled an inert Sentinel missile at Vandenberg after completing the first flight-test critical design review, keeping the programme on pace for a 2027 flight test.
• 08 Sep 2026 — CIRCM production contract. The Army awarded a $4.84bn firm-fixed-price IDIQ for CIRCM full-rate production, running to 30 Sep 2035.
• 04 Sep 2026 — Precision guidance kits. The Army awarded an $862.8m contract for M1156 precision guidance kits, and the Missile Defense Agency awarded a ~$508.5m ballistic missile target contract.
• 19 Aug 2026 — Dividend declared. The board declared a $2.47 quarterly dividend, paid on 16 Sep 2026 to holders of record on 31 Aug.
• 11 Aug 2026 — Golden Dome interceptor tests. The Golden Dome programme lead said participating companies, including Northrop, had completed a first round of key space-based interceptor tests.
• 03 Aug 2026 — $3bn rocket motor agreements. Northrop signed framework agreements worth over $3bn with the Department of War and Lockheed Martin for PAC-3 MSE solid rocket motors and THAAD components.
• 21 Jul 2026 — Q2 2026 results and guidance raise. Sales rose 5% to $10.88bn and GAAP EPS was $7.68, while operating income fell 23% on SiAW and GEM 63XL charges. Backlog hit a record $104.7bn and EPS guidance rose to $28.60–29.10.

Budget and macro releases that move defence stocks are tracked on the Economic Calendar.

12. Key Dates

• 20 Oct 2026 — Q3 2026 results before the market opens, webcast 9:30am ET
• TBC — next quarterly dividend declaration (the last $2.47 dividend was declared on 19 Aug 2026 and paid on 16 Sep 2026)
• Expected Dec 2026 — Air Force target for the Sentinel restructure and new Milestone B decision
• Expected Jan 2027 — Q4 and full-year 2026 results with 2027 guidance (FY2025 results were released on 27 Jan 2026)
• Expected 2027 — first B-21 delivery to Ellsworth Air Force Base and the first Sentinel flight test

The FY2027 US defence appropriations timetable remains uncertain; a continuing resolution would limit new starts and production-rate increases.

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