Northrop Grumman Lifts Outlook as Backlog Buildup Continues — Update

By Dean Seal

Northrop Grumman raised its guidance on the back of steady global demand, though some margin softness and projected cost increases are weighing on shares.

The aerospace and defense company said Tuesday that it now expects $43.75 billion to $44.25 billion in sales in 2026, adding a quarter-billion dollars to its previous targets. Adjusted earnings are now projected at $28.60 to $29.10 a share, up from $27.40 to $27.90 a share previously.

Chief Executive Kathy Warden said the company's backlog is surging to new records, thanks to robust global demand. Net awards of $20 billion during the quarter boosted the backlog to $105 billion.

But according to BNP Paribas analyst Matt Akers, the earnings outlook raise was mostly driven by a tax upside. Operating income was down 38% in Northrop's defense systems segment and 16% in its space systems unit from compressed margins. "We expect the stock to underperform on this result," Akers said.

Shares slid 2.4% to $511.45 in early trading. The stock has fallen more than 10% since the start of the year. A glut of defense spending has boosted legacy defense firms' results this year, but not their stocks.

In the second quarter, Northrop posted a profit of $1.09 billion, or $7.68 a share, compared with $1.17 billion, or $8.15 a share, in the same quarter a year earlier. Analysts polled by FactSet had been expecting just $6.82 a share.

Chief Financial Officer John Greene told analysts that per-share earnings benefited from a drop in the company's effective tax rate during the quarter.

Meanwhile in Northrop's defense segment, the company is now projecting higher costs to advance the production on the extended range version of its Advanced Anti-Radiation Guided Missile, and to develop its Stand-in Attack Weapon air-to-surface missile.

The space segment is also now seeing increased estimated costs needed to complete its GEM 63XL rocket booster program, Greene said.

Total sales in the second quarter rose 5% to $10.88 billion, ahead of analyst targets for $10.8 billion. Northrop saw growth across its aeronautics, defense, mission and space businesses.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

July 21, 2026 11:00 ET (15:00 GMT)