What happened
Northrop Grumman Corporation (NYSE: NOC) reported third quarter 2026 sales of $11.1 billion, up 7% from a year earlier. Net earnings were $1.1 billion, or $7.89 per diluted share, versus $1.1 billion, or $7.67 per diluted share, in third quarter 2025.
Segment operating income rose $68 million, or 5%, to $1.34 billion, led by $72 million higher operating income at Aeronautics Systems. Sales increased at all four sectors, including 14% growth at Aeronautics Systems and 12% growth at Defense Systems.
Mission Systems sales rose 2% to $3.15 billion, and Space Systems sales rose 2% to $2.75 billion. Backlog increased to $109.6 billion, and net awards totaled $16.4 billion. Third quarter awards included $4.6 billion for restricted programs, $2.0 billion for Sentinel, $1.4 billion for Virginia Class submarines, $1.3 billion for F-35 at Aeronautics Systems, and $1.0 billion for E-2.
Key numbers
| Metric | Latest | Change | Source |
|---|---|---|---|
| Sales | $11.1 billion | from $10.4 billion, +7% | Northrop Grumman Reports Third Quarter 2026 Financial Results |
| Backlog | $109.6 billion | from $95.68 billion, +15% | Northrop Grumman Reports Third Quarter 2026 Financial Results |
| Adjusted free cash flow | $1.81 billion | from $1.26 billion, +44% | Northrop Grumman Reports Third Quarter 2026 Financial Results |
| Segment operating income | $1.35 billion | from $1.28 billion, +5% | Northrop Grumman Reports Third Quarter 2026 Financial Results |
| Diluted EPS | $7.89 | from $7.67, +3% | Northrop Grumman Reports Third Quarter 2026 Financial Results |
Read more: Northrop Grumman (NOC) stock analysis and investment case
Why it matters
OptimistFi's case is that Northrop Grumman turns long-term, complex defense and space contracts into steady revenue and cash generation, and this report supports that view. Third quarter sales rose by $699 million from $10.42 billion a year earlier, matching the filing's 7% increase. A book to bill ratio of 1.5x left awards above sales in the quarter. Backlog rose 15% from $95.68 billion at December 31, 2025.
The company also raised 2026 guidance for sales to $43.75 billion to $44.25 billion and adjusted free cash flow to $3.1 billion to $3.5 billion. It lifted guidance for segment operating income to $4.94 billion to $5.04 billion and MTM-adjusted EPS to $29.35 to $29.75. The main caveat is that adjusted free cash flow was helped by $371 million of proceeds from the sale of equipment to a customer. Operating margin rate also slipped to 11.4% from 11.9%.
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What's next
Northrop Grumman will webcast its earnings conference call at 9:30 a.m. Eastern Time on October 20, 2026. Investors will listen for whether management repeats the raised 2026 ranges and whether backlog and cash flow trends hold in the fourth quarter. If those trends continue, that would support the investment case. Weaker sales, margin or cash flow trends would do the opposite.
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Sources
- Northrop Grumman Reports Third Quarter 2026 Financial Results — Earnings release furnished as Exhibit 99 on October 20, 2026.
- Form 8-K — Item 2.02 says Northrop Grumman issued the earnings release on October 20, 2026.
Read the full OptimistFi thesis on Northrop Grumman Corporation: https://optimistfi.com/stocks/NOC
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Originally published on OptimistFi, evidence-first equity research. More at optimistfi.com.
