Q3 2026 · the quarter NOC reports
Sales
PricedIn$11.1B$10.7B – $11.5B
$10.7B$11.1B$11.5B
diluted EPS
PricedIn$7.30$6.48 – $8.08
$6.48$7.30$8.08
Middlethe forecast80% range1 in 10 chance below this bar, 1 in 10 above it. These are the low and high printed by each number.
The models agree closely: sales middles run from $11.0B to $11.2B. GLM is lowest at $11.0B, placing growth "at the low end of their mid-to-high single-digit range because the second-half step-up pattern implies more of the increase in Q4". On earnings Grok is lowest at $7.03, with company margin "near 10.5 percent". Muse Wonder is highest on both, at $11.2B and $7.53, with margins "above eleven percent excluding the recent charges".
The models expect third-quarter sales of about $11.1B, the start of the second-half step-up the company has guided to.
Sales$11.1B$10.7B – $11.5B · +7% on Q3 2025 ($10.4B)
Diluted EPS$7.30$6.48 – $8.08 · −5% on Q3 2025 ($7.67)
Investment and cash generation
Base case
Capital spending$485M
Free cash flow$1.06B
Free cash flow: operating cash flow less capital spending.
Northrop Grumman reports its third quarter on 20 October 2026, before the open. In the second quarter it sold $10.9B and earned $7.68 a share, helped by a one-off tax benefit that cut the tax rate to 6.3%. Charges on a rocket motor and a stand-in attack weapon held margins down.
In July the company raised its 2026 sales range to $43.75B to $44.25B and said third-quarter sales should grow by a mid-to-high single-digit percentage on last year's $10.4B. Backlog reached a record $104.7B, and it expects orders of at least 1.25 times sales this year.
All six models sit close together, with sales middles from $11.0B to $11.2B and an average of $11.1B, 2.2% above the second quarter. They expect the operating margin to recover to about 11% as the first-half charges do not repeat.
Earnings per share fall to about $7.30 from $7.68 even on higher profit, because the tax rate returns to about 18%. The range runs from $6.48 to $8.08; a fresh charge on a fixed-price program is the main way the quarter could miss.
Earnings per share of about $7.30 rest on an operating margin near 11%, a tax rate back near 18% after the second quarter's one-off 6.3%, and a flat share count with buybacks paused.
Sales by quarter
Q1 2025$9.5B−7%
Q2 2025$10.4B+1%
Q3 2025$10.4B+4%
Q4 2025$11.7B+10%
Q1 2026$9.9B+4%
Q2 2026$10.9B+5%
Q3 2026$11.1B+7%
Each percent is on the same quarter a year earlier. The last row is the models' forecast.
The quarter forecast, line by line
The lines as the company's statement shows them. The forecast columns are the average of the models, line by line. Sales growth is the change on the same quarter a year earlier. Earnings per share is the headline's: the company's own for the reported quarter, and for a forecast quarter worked out from the averaged lines with the company's adjustments.
What it rests on
- Raised 2026 sales range
- $43.75B to $44.25B, raised in July
Sales $43,750 — $44,250
Second-quarter earnings release, July 2026 - Third-quarter growth guide
- Mid-to-high single-digit growth on a year earlier
With this in mind, we anticipate mid to high single-digit year-over-year sales growth in Q3.
Second-quarter earnings call, July 2026 - Rocket motor charge
- $91M unfavorable adjustment on the GEM 63XL motor in the second quarter
including a $91 million unfavorable adjustment on GEM 63XL largely related to increases in the projected cost to complete the program
Second-quarter earnings release - Weapon program charge
- $68M unfavorable adjustment on the stand-in attack weapon
Strong performance across the portfolio was partially offset by a $68 million unfavorable adjustment on SAW related to an increase in projected costs to support the design and qualification of the system.
Second-quarter earnings call, July 2026 - Second-quarter tax rate
- 6.3%, down from 17.7%, after a one-off remeasurement
The second quarter 2026 ETR decreased to 6.3 percent from 17.7 percent
Second-quarter quarterly report - Record backlog
- $104.7B at the end of June 2026
Company backlog as of June 30, 2026 was $104.7 billion.
Second-quarter quarterly report
Low and high
Basethe middle forecast
Key assumptions
Sales grow about 5.5% to 7% on a year earlier, inside the company's guide. In July the company guided third-quarter growth at a mid-to-high single-digit rate on last year's $10.4B.6 of 6
- Opus 5.5Third-quarter sales should grow by a mid-to-high single-digit percentage on last year's $10.4 billion, so I use 7%
- GPT-6.1 SolThe July earnings call supports third-quarter sales growth of about 7%.
- Grok 4.7with the third quarter up about 6.5 percent, inside the company's mid-to-high single-digit comment
- GLM 5.3Q3 sales at $11.0 billion (about 5.5% growth on Q3 2025's $10.4 billion
- Gemini 4 Argonguided to mid to high single-digit year-over-year sales growth in the third quarter of 2026
- Muse Wondersplit as 11.15 billion in the third quarter and 12.093 billion in the fourth
Margins recover to about 11% as the first-half program charges do not repeat. Apart from the weapon charge, the defense segment earned 11% in the second quarter.6 of 6
- GPT-6.1 SolMy middle assumes no further large charge and a second-half recovery toward roughly 11% margins in defense and space.
- GLM 5.3I assumed they are not repeated in Q3/Q4 (supporting an 11%-plus segment margin recovery)
- Muse WonderThe base assumes no repeat and margins above eleven percent excluding them in the second half
- Grok 4.7The base case assumes that does not repeat and that segment profit stays in the reiterated range.
- Opus 5.5so I kept the second-half margin step-up (segment margin about 11.4% in the third quarter and 11.6% in the fourth)
- Gemini 4 Argonwe project operating margins to rebound from 10.0 percent in the first half of 2026 to 10.8 percent in the second half of 2026
The tax rate returns to about 18% after the second quarter's one-off 6.3%. The second-quarter rate came from a $115M remeasurement of uncertain tax positions that will not recur.4 of 6
- GPT-6.1 SolRemaining-quarter ordinary federal and foreign tax is about 18%
- Opus 5.5I use a normal tax rate of about 17.5% for the second half of 2026
- Muse WonderSecond half tax is modelled near seventeen to twenty percent
- GLM 5.3the July guide's mid-14% reflects the one-time IRS remeasurement benefit booked in Q2
The share count stays flat near 142 million, with buybacks paused. Management chose to keep shares flat and spend more on plant and equipment instead.4 of 6
- GPT-6.1 SolI use about 142 million diluted shares in each remaining 2026 quarter
- Opus 5.5I hold diluted shares at about 142.5 million through 2028
- Grok 4.7Buybacks stay paused, so diluted shares stay near 142.3 million.
- GLM 5.3share count of about 142.3 million
If all of this happens
$11.1Bsales
$7.30diluted EPS
$485MCapital spending
$1.06BFree cash flow
Cash walk not supplied by every model.
Lowabout 1 chance in 10 of worse
What the low case assumes
Another fixed-price charge on the rocket motor or stand-in weapon cuts the quarter's margin. Both programs took charges in the second quarter, and development work carries more cost uncertainty.6 of 6
- Grok 4.7Further cost growth on the stand-in attack weapon and the extended graphite epoxy motor
- GLM 5.3New unfavorable estimate-at-completion charges on fixed-price development programs (B-21 history, GEM 63XL, Stand-in Attack Weapon)
- Muse WonderFurther contract cost growth in Defence Systems and Space Systems
- Opus 5.5further charges on fixed-price development programs
- GPT-6.1 SolQualification problems and fixed-price cost increases
- Gemini 4 ArgonAdditional cost growth or qualification test delays on fixed-price development and early production programs
Second-half sales slip as the continuing resolution delays awards and payments. Funding runs on a continuing resolution to early December, and management expects it to be extended.4 of 6
- Muse WonderDelayed awards and second-half sales timing
- Grok 4.7A longer continuing resolution or a short shutdown delays awards and cash collections
- GPT-6.1 SolDelayed appropriations and contract awards
- Opus 5.5a long continuing resolution delaying new awards
Supplier and labor bottlenecks limit how fast production can rise. Qualification, cleared labor and suppliers can bind even when demand is strong.2 of 6
- Gemini 4 ArgonSupply chain bottlenecks in microelectronics, energetic materials, or skilled cleared labor limiting manufacturing throughput
- GPT-6.1 SolFunding and supplier bottlenecks delay the second-half ramp
If all of this happens
$10.7Bsales · −3% vs base
$6.48EPS · −11% vs base
Sales would come in near $10.7B, 3.3% below the base and 1.2% below the second quarter, and earnings per share near $6.48, 11% lower. That needs second-half work to slip under the continuing resolution and another charge on a fixed-price program like the second quarter's $91M rocket motor and $68M weapon adjustments. Grok's low is furthest at $6.15 a share: it starts from the thinnest base margin, near 10%, and adds further cost growth on both troubled programs.
The first half already carried $162M of charges on the rocket motor and $68M on the weapon, and the defense segment's second-quarter margin fell to 7.5%.
The six lows run from $10.7B (GLM 5.3) to $10.8B (Muse Wonder).
First signThird-quarter growth below mid-single digits, or a new unfavorable estimate adjustment, in the release on 20 October 2026.
Highabout 1 chance in 10 of better
What the high case assumes
Mature production programs keep lifting margins above plan. The chief executive said mature aircraft programs are earning higher than anticipated margins this year.4 of 6
- GPT-6.1 Solit is really those other mature production programs that are generating the higher than anticipated margins
- Grok 4.7Mature production programs keep the margin improvement seen in Aeronautics Systems
- Muse WonderProduction and international mix lifting segment margins
- Opus 5.5margin gains as development shifts to production
Awards convert to sales faster, with orders at least 1.25 times sales. Second-quarter awards of $20.0B lifted backlog to a record $104.7B.3 of 6
- Grok 4.7Bookings stay strong enough for a full-year book-to-bill of at least 1.25
- Muse WonderFaster United States and international award conversion
- GPT-6.1 SolFaster missile contract awards and production
International deliveries arrive sooner than planned. The company aims to double international sales to $10B by 2031.2 of 6
- GPT-6.1 SolStronger international deliveries
- GLM 5.3Faster international conversion (NATO Triton, IBCS to Kuwait, UAE and Qatar) toward the $10 billion-by-2031 goal
If all of this happens
$11.5Bsales · +4% vs base
$8.08EPS · +11% vs base
Sales would reach about $11.5B, 3.5% above the base and 5.7% above the second quarter, with earnings per share near $8.08, 11% higher. That needs awards to convert faster, mature production programs to keep beating plan, and no new charges. Sol's high is furthest, at $11.7B and $8.35 a share: it puts the most weight on faster missile awards and better manufacturing margins arriving at once.
Mature aircraft programs were already earning more than planned, and in July the company raised its earnings range by $1.20 a share.
The six highs run from $11.4B (GLM 5.3) to $11.7B (GPT-6.1 Sol).
First signThird-quarter sales above $11.5B, or a raised 2026 sales range, in the release on 20 October 2026.
Watch
On 20 October 2026, before the open: third-quarter sales against $11.1B, margins in the defense and space segments, any new program charge, and whether the 2026 ranges are held or raised. Growth below mid-single digits points lower; a raised range points higher.
Q4 2026 · the quarter after
Sales
PricedIn$12.2B$11.7B – $12.7B
$11.7B$12.2B$12.7B
diluted EPS
PricedIn$10.12$5.72 – $13.83
$5.72$10.12$13.83
Middlethe forecast80% range1 in 10 chance below this bar, 1 in 10 above it. These are the low and high printed by each number.
Sales agree, from $12.1B to $12.2B; earnings split on the pension adjustment. Muse Wonder is lowest at $7.64, setting reported earnings "slightly above the adjusted middle". Sol is highest at $13.02, booking "an estimated $1 billion pre-tax pension benefit" in the quarter. Sol's range is also far wider, $3.50 to $19.50: its low rests on "Weaker pension remeasurement and tax outcomes", its high on "Favorable pension remeasurement lifts reported earnings beyond the operating improvement".
Fourth-quarter sales near $12.2B on the usual year-end step-up, with earnings swung by the year-end pension adjustment.
Sales$12.2B$11.7B – $12.7B · +4% on Q4 2025 ($11.7B)
Diluted EPS$10.12$5.72 – $13.83 · +1% on Q4 2025 ($9.99)
Investment and cash generation
Capital spending: not supplied by every model
Free cash flow: not supplied by every model
Free cash flow: operating cash flow less capital spending.
The fourth quarter is usually the company's largest: last year it sold $11.7B against $10.4B in the third quarter. The models expect the same shape, with sales near $12.2B, 9.6% above their third-quarter forecast, which fills out the company's raised range for the year.
Sales barely divide the models, from $12.1B to $12.2B. Earnings do. Each year end the company books the change in its pension plans' value straight into fourth-quarter earnings, and its own earnings range leaves that out.
Corporate bond yields have risen this year, which shrinks the pension obligation, but bond holdings lost value too. Sol counts a gain of about $1B before tax and Grok about $900M; GLM, Gemini and Opus count gains of about $350M, $180M and $150M, and Muse Wonder little.
So earnings per share average $10.12 but range from Muse Wonder's $7.64 to Sol's $13.02, and the full range runs from $5.72 to $13.83. A pension loss like 2023's $422M expense would put the quarter near the bottom.
Earnings per share of about $10.12 combine an operating margin near 11% and a tax rate near 19% with pension income lifted by each model's year-end adjustment, on a flat share count.
What it rests on
- 2024 pension gain
- $443M, driven by a 58 basis point rise in the discount rate
The 2024 MTM benefit of $443 million was primarily driven by a 58 basis point increase in the discount rate
2024 annual report - 2023 pension adjustment
- A $422M expense
2023-01-01 2023-12-31 -422000000 0001133421-26-000003 2026-01-27 16:02:49
2025 annual report financial data - When the adjustment lands
- Recognized in earnings at the annual fourth-quarter remeasurement
are recognized immediately through earnings upon annual remeasurement in the fourth quarter
2025 annual report, pension accounting - Asset-return sensitivity
- Each point of return below assumption costs about $314M
2026 MTM expense (benefit) $ 314 $ (314)
2025 annual report, pension sensitivities - Range excludes pension
- $28.60 to $29.10 a share for 2026, before the pension adjustment
MTM-adjusted EPS1 $28.60 — $29.10
Second-quarter earnings release, July 2026
Low and high
Basethe middle forecast
Key assumptions
Sales step up about 9.6% from the third quarter, the same year-end shape as 2025. Last year fourth-quarter sales were $11.7B against $10.4B in the third quarter.6 of 6
- Opus 5.5a fourth quarter about $1 billion above the third
- Grok 4.7the fourth quarter is larger, the same seasonal shape as last year
- Muse Wondermatching the usual fourth quarter weight
- GLM 5.3a second-half step-up similar to 2025
- Gemini 4 Argonfourth-quarter supplier material deliveries create a consistent fourth-quarter peak in revenue
- GPT-6.1 Solfourth-quarter sales of $12.24 billion and ordinary operating income of about $1.30 billion
A year-end pension gain, sized from about $150M to about $1B before tax. Corporate bond yields rose from about 5.4% to about 6.1% this year, shrinking the pension obligation.5 of 6
- GPT-6.1 SolI use a $1 billion net actuarial benefit in 2026
- Grok 4.7how the base case lands on a $900 million pre-tax pension gain
- GLM 5.3I assumed a middle gain of about $350 million before tax
- Gemini 4 Argonwe include a modest 180 million dollar pre-tax
- Opus 5.5My net estimate is a small gain of about $150 million before tax
Margins hold near 11% with no new program charges. In July the company reaffirmed segment profit of $4.85B to $5.0B and expects better second-half margins.3 of 6
- Opus 5.5so I kept the second-half margin step-up (segment margin about 11.4% in the third quarter and 11.6% in the fourth)
- Muse WonderThe base assumes no repeat and margins above eleven percent excluding them in the second half
- GPT-6.1 SolMy middle assumes no further large charge and a second-half recovery toward roughly 11% margins in defense and space.
If all of this happens
$12.2Bsales
$10.12diluted EPS
Lowabout 1 chance in 10 of worse
What the low case assumes
The pension adjustment turns into a loss as yields fall or assets lag. Each point of asset return below the 7.5% assumption costs about $314M.6 of 6
- Opus 5.5a pension mark-to-market loss at year end
- GLM 5.3Year-end pension mark swings to an expense (as in 2019, 2020 and 2023)
- Gemini 4 ArgonUnfavorable year-end pension mark-to-market expense if equity markets decline or interest rates fall without offsetting asset gains
- Grok 4.7Bond yields reverse, shrinking the year-end pension gain
- Muse WonderSlower international conversion and a negative pension mark-to-market
- GPT-6.1 SolWeaker pension remeasurement and tax outcomes
Year-end deliveries slip under a longer continuing resolution. Management expects the continuing resolution to be extended past early December.3 of 6
- Muse WonderDelayed awards and second-half sales timing
- Grok 4.7A longer continuing resolution or a short shutdown delays awards and cash collections
- GLM 5.3Continuing resolution extended well into 2027, delaying Golden Dome, PAC-3 and multiyear missile awards
A new fixed-price charge, possibly on the bomber's early lots, hits the quarter. The B-21 production lots are fixed-price at about zero margin, and losses were booked in 2023 and 2025.3 of 6
- Opus 5.5further charges on fixed-price development programs
- Gemini 4 Argonincluding B-21 low-rate initial production lots, Stand-in Attack Weapon, and GEM 63XL boosters
- GPT-6.1 SolQualification problems and fixed-price cost increases
If all of this happens
$11.7Bsales · −4% vs base
$5.72EPS · −44% vs base
Earnings per share would fall to about $5.72, 44% below the base, and sales to about $11.7B, 4.1% lower. That needs bond yields to fall back or pension assets to lose more, turning the year-end adjustment into a loss, plus year-end deliveries slipping under a longer continuing resolution or a new fixed-price charge. Sol's low is furthest at $3.50 and Opus's at $3.80: Opus puts the pension loss at about $1 billion, and Sol adds weaker tax outcomes. Muse Wonder has the lowest sales, $11.5B, from delayed awards and second-half timing.
The pension adjustment was a $422M expense in 2023 and gains of $443M in 2024 and $527M in 2025.
The six lows run from $11.5B (Muse Wonder) to $11.8B (Gemini 4 Argon).
First signCorporate bond yields falling back toward their end-2025 level of about 5.4% before 31 December 2026.
Highabout 1 chance in 10 of better
What the high case assumes
Yields stay high into year end, enlarging the pension gain. A 25 basis point rise in the discount rate cuts the pension obligation by about $761M.4 of 6
- Grok 4.7Bond yields remain elevated, enlarging the year-end pension gain
- Opus 5.5a large pension mark-to-market gain at year end
- Gemini 4 ArgonFavorable year-end pension mark-to-market benefit driven by higher corporate bond discount rates and strong equity market returns
- GPT-6.1 SolBetter manufacturing margins and pension outcomes
Mature production programs keep margins above plan. The chief executive said mature aircraft programs are earning higher than anticipated margins.3 of 6
- Grok 4.7Mature production programs keep the margin improvement seen in Aeronautics Systems
- Muse WonderProduction and international mix lifting segment margins
- Opus 5.5margin gains as development shifts to production
Year-end deliveries and awards convert faster than planned. Orders are expected at least 1.25 times sales this year.3 of 6
- Muse WonderFaster United States and international award conversion
- GPT-6.1 SolFaster missile contract awards and production
- Grok 4.7Bookings stay strong enough for a full-year book-to-bill of at least 1.25
If all of this happens
$12.7Bsales · +4% vs base
$13.83EPS · +37% vs base
Earnings per share would reach about $13.83, 37% above the base, with sales near $12.7B, 4.2% higher. That needs yields to stay high or rise into year end while stocks hold, enlarging the pension gain, and year-end deliveries to beat plan. Sol is furthest at $19.50 because its base already holds about $1 billion of pension gain; Grok, at $16.80, holds about $900M. Opus's high needs a gain "above $1 billion".
Corporate bond yields stood near 6.1% in mid-October, against about 5.4% at the end of 2025.
The six highs run from $12.6B (Gemini 4 Argon) to $12.8B (GPT-6.1 Sol).
First signCorporate bond yields still above 6% at 31 December 2026, with stocks holding their gains.
Watch
The 20 October 2026 release sets the third-quarter starting point; then bond yields and stocks through 31 December 2026 decide the pension adjustment. Yields above 6% point higher; a fall back toward 5.4%, or a new program charge, points lower.