Shares of Northrop Grumman Corporation (NASDAQ:NOC) are up Tuesday after the defense company reported quarterly earnings that showed a backlog of $95.7 billion for next-generation defense systems.
- Northrop Grumman shares are advancing steadily. Why is NOC stock advancing?
Technological Advancements and Operational Efficiency
Northrop Grumman beat expectations for revenue and earnings-per-share, reporting $11.71 billion and $7.23 respectively. Analysts had been looking for revenue of $11.63 billion and earnings-per-share of $6.97.
The company reported a 10% increase in sales in the fourth quarter, with notable growth in sectors such as Aeronautics Systems and Mission Systems. This growth is largely attributed to ramp-ups in programs like the F-35 and new awards in restricted programs, highlighting the firm’s strategic alignment with current defense spending trends.
The company’s operating income rose by 17% in the fourth quarter, with an operating margin rate increase to 10.9%. Northrup Grumman also said “robust” global demand led to a backlog of $95.7 billion.
“Our record backlog supports our 2026 outlook of mid-single digit sales growth and we are confident in our ability to deliver continued strong performance,”said CEO Kathy Warden.
2026 Outlook: Sustained Growth Amid Challenges
Looking ahead, Northrop Grumman projects continued growth with mid-single digit sales increases into 2026. The company set fiscal 2026 guidance of $43.5 billion to $44 billion for revenue, and also projected free cash flow between $3.1 billion and $3.5 billion. Fiscal 2026 earnings are expected to come in between $27.40 and $27.90 per share.
Impact of Regulatory Changes on Financials
The enactment of the One Big Beautiful Bill Act (OBBBA) has introduced changes that significantly benefit companies like Northrop Grumman. With provisions like the repeal of mandatory capitalization of R&D expenditures, Northrop Grumman has been able to leverage additional financial flexibility, enhancing its ability to invest in growth areas.
NOC Shares Inch Higher
NOC Price Action: Northrop shares are up 1.30% at $669.55 at the time of publication on Tuesday. The stock is trading just 1.1% below its 52-week high, with an RSI of 66.0 showing strong momentum.
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