On Tuesday, Northrop Grumman Corp. (NASDAQ:NOC) reported upbeat first-quarter fiscal year 2026 (FY26) results, with both earnings and revenue exceeding the consensus.

However, the company reaffirmed its FY26 adjusted EPS guidance and sales guidance, but it missed the consensus.

Earnings Snapshot

EPS of $6.14 exceeded the analyst consensus estimate of $6.09, and sales of $9.881 billion beat the street view of $9.752 billion.

Organic sales rose 5%, led by modernization efforts and strong demand in the defense sector.

Northrop disclosed total awards of $9.8 billion in the quarter and ended the period with a backlog of $96 billion.

The company reiterated the fiscal year 2026 sales outlook of $43.50 billion to $44.00 billion, against a $43.908 billion estimate. Also, it affirmed the adjusted EPS guidance of $27.40 to $27.90, versus the analyst estimate of $28.01.

Conference Call Takeaways

Northrop Grumman disclosed that it is expanding annual production capacity on the B-21 aircraft by 25%.

The company says that the outlook remains positive, with expected higher global defense spending and strong demand for missile defense systems and advanced interceptors.

NOC said the administration recently proposed a $1.5 trillion defense budget for fiscal year 2027, prioritizing modernization and reflecting a 44% increase over current spending levels.

The plan includes a $1.1 trillion base budget, roughly 30% higher than FY26.

It maintains funding for major programs such as B-21, Sentinel, IBCS, and E-2D, along with several classified projects.

If implemented, total defense spending would reach about 5% of GDP, up from around 3% in recent years and closer to Cold War-era levels.

For 2026, the company expects the growth to accelerate throughout the year in line with 2025 trends.

For the second quarter, NOC expects sales to grow in the high single digits sequentially, with broad-based growth across all segments for the full year.

Also, operating income is expected to remain strong, with margins in the low-to-mid 11% range and gradual improvement over the year driven by mix, timing, and execution.

The company now expects $1.85 billion in 2026 capex, including an additional $200 million to support B-21 production capacity.

Analyst Consensus & Recent Actions: Northrop Grumman stock carries a Buy Rating with an average price target of $740.90. Recent analyst moves include:

  • Jefferies: Hold (Raises Target to $710.00) (April 9)
  • Citigroup: Buy (Raises Target to $807.00) (April 2)
  • Wells Fargo: Initiated with Overweight (Target $800.00) (April 1)

Top ETF Exposure

  • iShares US Aerospace & Defense ETF (BATS:ITA): 4.58% Weight
  • Global X Defense Tech ETF (NYSE:SHLD): 4.81% Weight
  • Invesco Aerospace & Defense ETF (NYSE:PPA): 5.30% Weight

Significance: Because NOC carries significant weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.

NOC Stock Price Activity: Northrop Grumman shares were up 0.80% at $616.00 during premarket trading on Wednesday, according to Benzinga Pro data.

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