Security and aerospace company Northrop Grumman (NYSE:NOC) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 9.6% year on year to $11.71 billion. On the other hand, the company’s full-year revenue guidance of $43.75 billion at the midpoint came in 1.1% below analysts’ estimates. Its non-GAAP profit of $7.23 per share was 3.8% above analysts’ consensus estimates.
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Northrop Grumman (NOC) Q4 CY2025 Highlights:
- Revenue: $11.71 billion vs analyst estimates of $11.63 billion (9.6% year-on-year growth, 0.7% beat)
- Adjusted EPS: $7.23 vs analyst estimates of $6.96 (3.8% beat)
- Adjusted EBITDA: $1.68 billion vs analyst estimates of $1.63 billion (14.3% margin, 2.6% beat)
- Adjusted EPS guidance for the upcoming financial year 2026 is $27.65 at the midpoint, missing analyst estimates by 4.1%
- Operating Margin: 10.9%, in line with the same quarter last year
- Backlog: $95.68 billion at quarter end, up 4.6% year on year
- Market Capitalization: $96.38 billion
StockStory’s Take
Northrop Grumman’s latest quarter was marked by steady operational execution and robust customer demand, as the company delivered sales growth across key segments and ended the year with a record backlog. Management credited solid execution in its Aeronautics, Defense, Mission, and Space Systems divisions for the performance, highlighting increased production on major programs such as the B-21 bomber and tactical missile systems. CEO Kathy Warden noted that, “Our backlog has grown by nearly $20 billion since 2021,” emphasizing the company’s alignment with evolving national security priorities and its capacity to deliver advanced defense solutions.
Looking ahead, Northrop Grumman’s guidance reflects a disciplined approach to portfolio growth, driven by continued investments in production capacity and a strong pipeline of international and domestic defense programs. Management pointed to growing demand for advanced munitions, missile defense, and space systems as key drivers for 2026 and beyond. CFO John Green stated, “We are increasing our capital expenditures to enhance production capacity and support the industrial base,” underscoring the company’s focus on scaling operations to meet anticipated contract wins and evolving customer needs.
Key Insights from Management’s Remarks
Management attributed the quarter’s results to broad-based demand, production ramp-ups in critical programs, and strategic investments in manufacturing capacity.
- Aeronautics growth on key programs: The Aeronautics Systems segment saw strong growth from increased production on the B-21 bomber, F-35, and the Takimo program, with management pointing to material timing and volume ramp-ups as primary contributors.
- Space segment expansion: The space business rebounded, driven by higher production of GEM 63 motors supporting Amazon’s Project LEO and new satellite awards for the Space Development Agency, indicating Northrop Grumman’s growing presence in commercial and government space markets.
- Capacity investments in munitions: Management highlighted successful efforts to double production of tactical solid rocket motors at its West Virginia facility, with plans to further expand capacity by another 50% and similar initiatives underway in Maryland, positioning the company to address rising demand in the munitions market.
- International sales momentum: International business grew by 20%, fueled by increased demand for air and missile defense systems, radars, and munitions. CEO Kathy Warden noted formal requests for IDCS from over 20 countries, signaling a strong pipeline for export opportunities.
- Strategic portfolio alignment: The company emphasized its transformation efforts to balance advanced, high-performance solutions with scalable, affordable products that can be delivered rapidly, citing Project Talon—a collaborative combat aircraft developed in under 24 months—as an example of this shift.
Drivers of Future Performance
Northrop Grumman’s 2026 outlook is shaped by accelerating demand for advanced defense capabilities, ongoing capacity investments, and a robust contract pipeline.
- Rising production capacity: Management expects continued investments in expanding manufacturing for solid rocket motors, missile defense, and advanced technologies to support anticipated contract wins, with capital expenditures projected to increase and further strengthen the industrial base.
- International contract opportunities: The company anticipates international awards, particularly for integrated air and missile defense systems and airborne radars, to contribute to sales momentum in 2027, supported by a pipeline of over 20 countries seeking new capabilities.
- Development program timing and risks: Guidance reflects a cautious approach, with management noting that upside from programs like B-21 production acceleration and Apex (FAXX) is not yet factored in, as contract timing and transition from development to production phases remain key variables.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the ramp-up of production capacity for solid rocket motors and missile systems, (2) execution and conversion of the growing international contract pipeline, especially in air and missile defense, and (3) the timing of key program awards and transitions from development to production, such as B-21 acceleration. Progress in capacity expansion and successful contract wins will be key indicators of Northrop Grumman’s ability to sustain growth.
Northrop Grumman currently trades at $676.79, up from $660.97 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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