Northrop Grumman Corporation

What they do

Northrop Grumman designs, develops, produces, integrates, sustains and modernizes military aircraft, space systems, missile defense, advanced weapons, strategic deterrence systems, mission systems, networking and communications. Its four reportable segments are Aeronautics Systems, Defense Systems, Mission Systems and Space Systems. About 40 percent of Aeronautics Systems work is performed through restricted programs. The U.S. government accounted for 84 percent of 2025 sales.

Revenue drivers

• Aeronautics Systems — Largest segment by quarterly sales at $3.52B in Q2 2026, up 13 percent year over year; includes B-21 Raider, B-2 sustainment, E-130J Phoenix II, and F-35 and F/A-18 fuselage work.
• Mission Systems — Second largest at $3.25B in Q2 2026, up 3 percent; contributed the most segment operating income at $501M with a 14 percent increase.
• Space Systems — $2.75B in Q2 2026 sales, up 4 percent, but segment operating income fell 16 percent to $236M.
• Defense Systems — $2.09B in Q2 2026 sales, up 5 percent, while segment operating income fell 38 percent to $156M; excludes the Immersive Mission Solutions training services unit divested May 24, 2025 for $333M.

Recent performance

Q2 2026 sales rose 5 percent year over year to $10.9B from $10.4B, with sequential growth of 10 percent. Net earnings were $1.1B, or $7.68 per diluted share, versus $1.2B and $8.15 in Q2 2025, which included a $150M ($1.04 per share) benefit from the training services divestiture. Total operating income fell 23 percent to $1.1B and operating margin declined 370 basis points to 10.1 percent, while segment operating margin fell 120 basis points to 10.6 percent. Net awards of $20B lifted backlog to a company record $105B. First-half 2026 sales were $20.76B, up 5 percent, and total operating income rose 4 percent to $2.09B.

Strategy

Management is focused on competing for and winning programs that enable continued growth, performing on commitments, and affordably delivering capability. The portfolio is aligned to national security priorities in space, C4ISR, air and missile defense, battle management, solid rocket motors, advanced weapons, strategic deterrence, and survivable and autonomous aircraft. The company cites investments in advanced technologies, its workforce and digital transformation. It realigned the Strike and Surveillance Aircraft Solutions unit from Defense Systems to Aeronautics Systems effective January 1, 2025, and sold the IMS training services unit in May 2025.

Risks

• Single-customer concentration — The U.S. government generated 84 percent of 2025 sales, so changes in its strategies, priorities or spending could materially affect results.
• Contract termination and modification — The U.S. government can delay, modify or cancel programs and terminate contracts for convenience or default.
• Supply chain and critical materials — The company cites supply delays, disruptions, and constraints on critical materials including rare earth minerals and metals.
• Tariffs and trade policy — Widespread U.S. tariffs, retaliatory measures and renegotiated trade agreements create uncertain cost and demand effects for the company, suppliers and customers.

Outlook

For 2026, management raised sales guidance to $43.75B-$44.25B, an increase of $250M, and MTM-adjusted EPS guidance to $28.60-$29.10, an increase of $1.20. The company reaffirmed guidance for operating income and adjusted free cash flow. Management attributed the increases to confidence in the team and demand for its technologies.