Northrop Grumman (NOC) Q3 2026 Earnings Report

The call was strongly positive overall. The company reported record backlog, solid revenue and EPS growth, strong operating margins and free cash flow, raised 2026 operating and EPS guidance, and outlined accelerating growth opportunities across B-21, Sentinel, space, munitions, autonomous systems, microelectronics, and international markets. The main challenges were continuing-resolution and appropriation uncertainty, higher planned B-21 capital spending, development-program risk, expected production-mix-related margin pressure, and muted near-term Space Systems growth, but management expressed confidence in execution and the long-term outlook.

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.