Northrop Grumman (NOC) Stock Slips Despite Earnings Beat and Raised Guidance

TLDR

• Northrop Grumman beat Q2 expectations with EPS of $7.68 on sales of $10.9 billion
• Full-year adjusted EPS guidance raised to $28.60–$29.10, up from $27.40–$27.90
• 2026 revenue forecast lifted by $250 million to $43.75–$44.25 billion
• Aeronautics segment posted 13% sales growth, driven by the B-21 Raider program
• NOC stock fell 3.5% in premarket trading despite the beat-and-raise quarter

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Northrop Grumman posted a strong second quarter on Tuesday, beating Wall Street estimates on both earnings and revenue. The stock still dropped.

Northrop Grumman Q2 2026 Earnings:

– EPS $7.68 (est $6.82)

– Sales $10.88B (est $10.81B)

– Sees FY Adj EPS $28.60 To $29.10, Saw $27.40 To $21.90

– Sees FY Sales $43.15B To $44.25B, Saw $43.50B To $44.00B

— First Squawk (@FirstSquawk) July 21, 2026

NOC fell 3.5% in premarket trading to $505.53, even as the company reported Q2 EPS of $7.68 against expectations of $6.82. Sales came in at $10.9 billion, topping the $10.8 billion analysts had penciled in.

Northrop Grumman Corporation, NOC

A year ago, Northrop posted EPS of $7.11 — excluding a one-time divestiture benefit — on sales of $10.4 billion.

The company raised its full-year adjusted EPS guidance to $28.60–$29.10, up from the prior range of $27.40–$27.90. Wall Street had been forecasting $27.94.

On the revenue side, Northrop lifted its 2026 forecast by $250 million to a range of $43.75–$44.25 billion, broadly in line with analyst estimates compiled by LSEG.

Total backlog hit a record $104.7 billion, up 9% from the same period last year. That’s a number worth paying attention to.

Aeronautics Leads the Way

The Aeronautics segment was the standout, posting a 13% year-over-year jump in Q2 sales. The B-21 Raider program and other classified work drove that growth.

In February, Northrop signed an Air Force agreement to expand B-21 production capacity by 25%, with the first delivery scheduled for 2027.

Defense systems revenue rose 5%, helped by strong Sentinel program sales — the land-based leg of the U.S. nuclear triad.

Not everything was clean, though. Operating income in the defense segment fell 38% as Northrop continues to spend heavily developing its Stand-in Attack Weapon and the long-range variant of the Advanced Anti-Radiation Guided Missile.

Tax Rate Raised Eyebrows

Jefferies analyst Sheila Kahyaoglu flagged that a lower tax rate helped the bottom line. Northrop’s effective tax rate dropped to around 6% in the quarter, down from 18% a year ago.

Investors don’t always reward tax-rate-driven beats the same way they reward operational outperformance. Operating profit of $1.1 billion came in roughly in line with estimates.

Coming into Tuesday, NOC was already down about 8% year to date and off roughly 28% since fighting broke out with Iran. A new Middle East conflict pushing a defense stock into bear market territory is a strange dynamic, but it reflects investor concern about what happens to the defense budget if Democrats retake the House in the midterms.

President Trump has proposed a record $1.5 trillion military budget for fiscal year 2027, well above the $901 billion approved for 2026. The U.S. has expended more than 50,000 rockets, missiles and other rocket-propelled projectiles since the start of the Russia-Ukraine conflict through the Iran war, according to Pentagon data.

Sales grew across all four divisions: aeronautics, defense systems, mission systems, and space systems.

The company’s total backlog now stands at a record $104.7 billion.