# NOC Release review · Q3 2026

> Northrop Grumman reported. Sales $11.1B vs our $11.1B, beat +0.1%. Diluted EPS $7.89 vs our $7.30, beat +59¢. After the call we forecast again.

Canonical: https://pricedin.markets/noc/fq3-2026/result/

Tuesday 20 October, 06:00 ET · released

Northrop Grumman reported. Sales $11.1B vs our $11.1B, beat +0.1%. Diluted EPS $7.89 vs our $7.30, beat +59¢. After the call we forecast again.

[After the call →](https://pricedin.markets/noc/fq3-2026/after-call/)

NOC · Q3 2026 results · release accepted 2026-10-20 06:00:28 ET

## The quarter against our forecast

Q3 2026 sales **$11.1B** our forecast $11.1B · +0.1%

diluted EPS **$7.89** our forecast $7.30 · +59¢

#### Q3 2026 line by line, as the income statement shows it

| Line | Outlook | Our forecast | Reported | Against our forecast |
| --- | --- | --- | --- | --- |
| Revenues | — | $11.1B | $11.1B | +0.1% beat |
| Product | — | $8.99B | $9.10B | +1.2% beat |
| Service | — | $2.12B | $2.02B | −4.4% miss |
| US Government | — | $9.30B | — | with the 10-Q |
| International | — | $1.65B | — | with the 10-Q |
| Other Customers | — | $162M | — | with the 10-Q |
| Total operating costs and expenses | — | $9.89B | $9.85B | −0.4% beat |
| Operating income | — | $1.22B | $1.27B | +4.2% beat |
| Operating margin | — | 11.0% | 11.4% | +0.4 pt beat |
| Interest expense | — | $158M | $158M | +0.0% in line |
| Non-operating FAS pension benefit | — | $166M | $167M | +0.7% beat |
| Other, net | — | $34.8M | $20.0M | −42.6% miss |
| Gain on sale of business | — | $0.0M | — | with the 10-Q |
| Earnings before income taxes | — | $1.26B | $1.30B | +3.0% beat |
| Federal and foreign income tax expense | — | $221M | $174M | −21.3% beat |
| Tax rate | — | 17.5% | 13.4% | −4.1 pt beat |
| Net earnings | — | $1.04B | $1.12B | +8.1% beat |
| Weighted-average diluted shares outstanding, in millions | — | 0.14B | 0.14B | +0.00B in line |
| Diluted EPS | — | $7.30 | $7.89 | +59¢ beat |

Our forecast was frozen before the release: the average of 6 models as of 2026-10-20 02:57:54 ET. Each reported number is quoted from the release; the 10-Q's tagged facts confirm the statement's lines when it is filed. Read before our lock: the SEC lists the release in its index that night, and the next check confirms its bytes. A cost above our forecast is a miss.

#### Why earnings per share on the income statement differs: $7.89 against our $7.30

Revenues +8.4¢

Total operating costs and expenses +27.5¢

Interest expense +0.0¢

Non-operating FAS pension benefit +0.8¢

Other, net −10.4¢

Federal and foreign income tax expense +33.0¢

Weighted-average diluted shares outstanding, in millions −0.2¢

Total +59.2¢

Code works this out from our forecast's lines and the reported ones, one line at a time; the bars add up to the difference.

#### The company's new outlook

Q4 2026

Our Q4 2026 forecast, made 2026-10-20 before this release sales $12.2B · diluted EPS $10.12

FY2026

Sales GAAP · 2026 $43,750 — $44,250

Segment operating income non-GAAP · 2026 $4,940 — $5,040

MTM-adjusted EPS non-GAAP (MTM-adjusted) · 2026 $29.35 — $29.75 Not compared: our forecast stated diluted EPS.

Adjusted free cash flow non-GAAP · 2026 $3,100 — $3,500

Segment operating income guidance increase at midpoint non-GAAP · 2026 $65 million “◦Segment operating income1 increased by $65 million at the midpoint”

MTM-adjusted EPS guidance increase at midpoint non-GAAP · 2026 $0.70 “◦MTM-adjusted EPS1 increased by $0.70 at the midpoint”

Aeronautics Systems sales and OM rate segment · 2026 ~$14; High 9%

Defense Systems sales and OM rate segment · 2026 Mid to High $8; ~10%

Mission Systems sales and OM rate segment · 2026 High $12; Mid 15%

Space Systems sales and OM rate segment · 2026 ~$11; Low 10%

Intersegment eliminations sales and OM rate segment · 2026 ~($2.7); Mid 13%

Each item as the release prints it. Our forecast stands beside an item only when the item is one of our two numbers, for our quarter or year, in our unit.

#### The company's reasons, from the release

- **Sales increase** “Third quarter 2026 sales increased $699 million, or 7 percent, driven by higher sales at all four sectors, including a 14 percent increase at Aeronautics Systems and a 12 percent increase at Defense Systems. These increases were partially offset by $95 million of higher intercompany eliminations.”
- **Operating income and margin** “Third quarter 2026 operating income increased $27 million, or 2 percent, primarily due to $68 million of higher segment operating income1, partially offset by a $52 million decrease in the FAS/CAS operating adjustment. Operating margin rate declined to 11.4 percent from 11.9 percent principally due to the decrease in the FAS/CAS operating adjustment.”
- **Segment operating income and margin** “Third quarter 2026 segment operating income1 increased $68 million, or 5 percent, primarily due to $72 million of higher operating income at Aeronautics Systems. Third quarter 2026 segment operating margin rate1 of 12.1 percent reflects strong program performance and higher operating margin rates at Aeronautics Systems and Space Systems. Segment operating margin rate1 decreased from 12.3 percent in the third quarter of 2025 principally due to a prior year $68 million favorable EAC adjustment in the restricted advanced microelectronics portfolio at Mission Systems.”
- **Income tax expense and rate** “Third quarter 2026 income tax expense decreased $49 million, or 22 percent, due to a lower effective tax rate (ETR) and $25 million of lower earnings before income taxes. The third quarter 2026 ETR decreased to 13.4 percent from 16.9 percent principally due to higher research credits.”
- **Net earnings** “Third quarter 2026 net earnings increased $24 million, or 2 percent, primarily due to a $49 million decrease in income tax expense, a $31 million increase in the non-operating FAS pension benefit and a $27 million increase in operating income, partially offset by an $86 million decrease in Other, net largely driven by favorable returns on marketable securities in the prior year.”
- **Operating cash flow and adjusted free cash flow** “Third quarter 2026 net cash provided by operating activities increased $188 million, or 12 percent, primarily due to improved trade working capital. Third quarter 2026 adjusted free cash flow1 increased $554 million, or 44 percent, due to proceeds received in connection with the sale of equipment to a customer and higher net cash provided by operating activities.”
- **Aeronautics Systems sales** “Third quarter 2026 sales increased $433 million, or 14 percent, primarily due to a $195 million increase on F-35 driven by the timing of material costs on production lots and increased sustainment volume, higher B-21 sales and an increase in B-2 sustainment volume.”
- **Aeronautics Systems operating income** “Third quarter 2026 operating income increased $72 million, or 24 percent, due to higher sales and a higher operating margin rate. Operating margin rate increased to 10.5 percent from 9.7 percent primarily due to higher net contract margin adjustments, including on certain mature production and sustainment programs.”
- **Defense Systems sales** “Third quarter 2026 sales increased $248 million, or 12 percent, primarily due to a $180 million increase on Sentinel as the program continues to ramp, higher volume on the Guided Multiple Launch Rocket System Extended Range (GMLRS ER) program due to the timing of awards, and higher volume on various tactical solid rocket motor programs. These increases were partially offset by lower volume on armament programs, primarily on certain military ammunition programs.”
- **Defense Systems operating income** “Third quarter 2026 operating income increased $16 million, or 7 percent, primarily due to higher sales, partially offset by a lower operating margin rate. Operating margin rate decreased to 10.8 percent from 11.4 percent, primarily due to changes in contract mix toward more cost-type content.”
- **Mission Systems sales** “Third quarter 2026 sales increased $62 million, or 2 percent, primarily due to ramp-up on restricted airborne radar programs and higher volume on marine systems programs. These increases were partially offset by lower volume on restricted advanced microelectronics programs.”
- **Mission Systems operating income** “Third quarter 2026 operating income decreased $15 million, or 3 percent, primarily due to a lower operating margin rate, partially offset by higher sales. Third quarter 2026 operating margin rate of 15.8 percent reflects strong program performance on marine systems and restricted airborne radar programs. Operating margin rate decreased from 16.7 percent in the third quarter of 2025 due, in part, to a prior year $68 million favorable EAC adjustment in the restricted advanced microelectronics portfolio.”
- **Space Systems sales** “Third quarter 2026 sales increased $51 million, or 2 percent, primarily due to ramp-up of programs in the restricted space portfolio, partially offset by $136 million of lower sales on Commercial Resupply Service missions due to launch timing.”
- **Space Systems operating income** “Third quarter 2026 operating income increased $14 million, or 5 percent, due to a higher operating margin rate and higher sales. Operating margin rate increased to 11.3 percent from 11.0 percent, primarily due to changes in contract mix toward more fixed-price content.”
- **Sales drivers overall** “FALLS CHURCH, Va. – October 20, 2026 – Northrop Grumman Corporation (NYSE: NOC) reported third quarter 2026 sales increased 7 percent to $11.1 billion, as compared with $10.4 billion in the third quarter of 2025. Third quarter sales reflect continued strong demand for our global capabilities. Third quarter 2026 net earnings totaled $1.1 billion, or $7.89 per diluted share, as compared with $1.1 billion, or $7.67 per diluted share, in the third quarter of 2025.”