Northrop Grumman (1NOC) AI Stock Analysis

Company Guidance

Northrop Grumman expects 2026 sales of $43.75 billion to $44.25 billion, a full year book to bill ratio of at least 1.3, segment operating income of $4.94 billion to $5.04 billion, a full year segment operating margin rate of approximately 11.3% at the midpoint, adjusted EPS guidance increased by $0.70, and adjusted free cash flow of $3.1 billion to $3.5 billion; segment sales guidance was reaffirmed, while operating income guidance increased at AES to the high 9% and at MS to the mid-15%, implying a fourth quarter segment operating margin rate of mid to high-11%. For 2027, the company projects sales growth between 5% and 7%, with higher sales in all 4 segments, expects segment operating income to grow faster than sales with 10 to 20 basis points of margin expansion beyond the current 2026 guidance midpoint, capital expenditures at 4.5% of sales and approximately $2.1 billion, and adjusted free cash flow in the range of $3.3 billion to $3.7 billion; it expects the growth rate in 2028 to be higher than it is in 2027, with potential for further acceleration beyond that, and expects about 35% of its backlog to burn down over the next 12 months, another 55% over the following 24 months, leaving the remainder past 36 months.