NOC US S&P 500Russell 1000 Earnings call · transcribed from the recording

Northrop Grumman (NOC) · Q3 2026 results and valuation

Share price: $550.96 · 2026-11-11

Northrop Grumman is an aerospace and defense technology company that provides space systems, military aircraft, missile defense, and advanced weapons. The company serves the U.S. government and international customers in the defense and intelligence sectors. Source: 10-K annual report (2026-01-27)

Results Q3 2026 vs Q2 2026 · previous quarter · published 20 Oct 2026 and 21 Jul 2026

Net income up 2.7% on the previous quarter. Management sounded upbeat, though noticeably less so answering analysts.

1 · Numbers

+2.7%

Net income vs Q2 2026

Outlook given

Net income 1.12B vs 1.09B

Revenue +2.3%

2 · How management spoke

Upbeat

More upbeat than 89% of company calls

Answers to analysts: upbeat, but clearly less so than the script.

Last call it was different: script and answers matched.

3 · What stood out

Northrop Grumman's adjusted free cash flow rose over 40% year-over-year to $1.8 billion, driven by working capital improvements and $371 million from the sale of a B-21 program test asset.

Valuation

Is Northrop Grumman undervalued?

Reverse DCF. Free cash flow from the last full fiscal year (2025-12-31), grown for 10 years, discounted back, plus a terminal value. “Implied growth” is the rate the current price assumes.

At 4.7% growth a year (3-year revenue growth), the model's fair value is $273.34 a share — the stock trades 102% above it. Today's price assumes 12.2% growth a year.

Current price

$550.96

close of 2026-11-11

Market implies growth of i

+12.2% for 10 yrs

Fair value / share

$273.34

Buy below

$205.00

Price vs fair value

Overvalued 102%

Price vs buy-below price

Overvalued 169%

FCF growth / yr i Discount rate i Terminal growth i Margin of safety i

Official channels

The company's own website and social media accounts.

Read between the lines

Figure

Adjusted free cash flow rose over 40% year-over-year to $1.8 billion, driven by working capital improvements and $371 million from the sale of a B-21 program test asset.

Source quote
“An adjusted free cash flow was $1.8 billion in the period, up over 40% compared to the prior year, driven by improvements in working capital and $371 million of proceeds from the sale of a test asset on the B-21 program.”
Guidance

The company expects approximately $2.1 billion in 2027 CAPEX.
Figure

Backlog increased 20% to $110 billion compared to the third quarter of last year, driven by bookings of over $16 billion.

Source quote
“As Kathy shared, backlog increased 20% to $110 billion compared to the third quarter of last year, driven by bookings of over $16 billion.”
Figure

The company expects the quarterly burn rate to be approximately $100 million.

Source quote
“And what we've said is about $100 million a quarter is what will typically burn down.”
Guidance

For 2027, the company expects 35% of its backlog to burn down over the next 12 months and 55% over the following 24 months.

3 more

Guidance

The company is increasing its 2026 guidance for segment operating income, margin rate, and earnings per share because it is exceeding its own expectations.
Figure

The company finalized the Virginia-class Block 6 submarine procurement for an additional 12 ship sets of main propulsion units and ship service turbine generators.

Source quote
“We also definitized the Virginia-class Block 6 submarine procurement for an additional 12 ship sets of main propulsion units and ship service turbine generators.”
Figure

An award added $1.4 billion to the backlog, supporting the company's partnership with the Navy through 2032.

Source quote
“The award value adds $1.4 billion to backlog, supporting our partnership with the Navy through 2032.”

Tone

How upbeat the language was, compared with other companiesi. Dot: Q3 2026. Ring: Q2 2026.

Prepared remarks Upbeat (was upbeat)

Answers to analysts Upbeat (was upbeat)

Management sounded noticeably less positive answering analysts than in its prepared script — a bigger drop than in 83% of calls. Scripts are polished in advance; a drop under questioning often marks the topics analysts pressed on, so the answers deserve a closer read than the script.

Sentences that drove the tone

“Beyond 2027, we expect growth to again accelerate and margins to further expand as we ramp on franchise programs increase production volumes, and grow international sales.”

“Our confidence in program execution is reflected in our 2027 outlook, where we expect to accelerate growth and expand margins and cash to offset increased capital investments for the B21...”

“We expect that growth to come with expanding margins, driven by strong program execution, cost efficiency, growing international sales, and a mixed shift towards more production as our development programs...”

Full figures

USD · SEC EDGAR XBRL (10-Q, period end 2026-09-30)

Metric	Q3 2026period end 2026-09-30	Q2 2026period end 2026-06-30	Change	Q3 2025	YoY
Revenue	11.12B	10.88B	+2.3%	10.42B	+6.7%
Operating income	1.27B	1.10B	+15.8%	1.24B	+2.2%
Net income	1.12B	1.09B	+2.7%	1.10B	+2.2%
EPS	7.89	7.68	+2.7%	7.67	+2.9%
P/E today 16.6	15.3	16.2	−0.9	21.9	−6.6

Topics

Most discussed now

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Faded since Q2 2026

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Fading Northrop Grumman is also confident that it is on a path for improved margin performance in the second half.

Latest announcements

Official filings, newest first. Summaries are generated from each filing and its attachment; every figure is checked against the source.

2026-10-20 Results of operations · SEC 8-K
Northrop Grumman reported third-quarter 2026 sales of $11.1 billion, an increase of 7 percent compared to $10.4 billion in the third quarter of 2025.
2026-08-21 Director or officer change · SEC 8-K
The Board of Directors approved a one-time grant of performance-based equity to Kathy J. Warden, consisting of a target of 35,910 Market Stock Units to be earned by December 31, 2031.
2026-07-21 Results of operations · SEC 8-K
Northrop Grumman Corporation issued an earnings release on July 21, 2026, for the second quarter ended June 30, 2026.
2026-05-21 Shareholder vote results · SEC 8-K · routine
2026-04-21 Results of operations · SEC 8-K
Northrop Grumman Corporation issued an earnings release on April 21, 2026, for the first quarter ended March 31, 2026.
2026-02-13 Director or officer change · SEC 8-K
Northrop Grumman Corporation elected Admiral Christopher W. Grady to its Board of Directors on February 12, 2026, with an annual cash retainer of $145,000 plus a $15,000 committee fee.
2026-01-27 Results of operations · SEC 8-K
Northrop Grumman Corporation issued an earnings release on January 27, 2026, reporting its financial results for the quarter and year ended December 31, 2025.
2025-11-06 Director or officer change · SEC 8-K
Northrop Grumman announced that John Greene will succeed Ken Crews as Chief Financial Officer, effective January 7, 2026, following Crews' 22-year tenure with the company.