Northrop Grumman Corporation ( NOC ) reported third-quarter 2025 earnings on Tuesday before market open, surpassing Wall Street expectations, even as sales came in slightly below forecasts.

The aerospace and defense contractor, posted earnings of $7.67 per share, up from $7.00 a year earlier and ahead of analyst estimates of $6.46, benefited from robust segment operating performance.

Quarterly sales rose 4% year over year to $10.423 billion, up from $9.996 billion, though they came in slightly below Wall Street’s estimate of $10.712 billion.

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Operating income for the third quarter of 2025 rose $122 million, or 11%, driven by a $131 million increase in segment operating income.

The operating margin improved to 11.9% from 11.2% in the prior year, reflecting stronger segment margins and overall operational efficiency.

Northrop Grumman ( NOC ) reported net awards of $12.2 billion in the third quarter of 2025, bringing total backlog to $91.4 billion. The company also posted a book-to-bill ratio of 1.17.

The company ended the third quarter with cash and cash equivalents of $1.96 billion.

Segment Performance

Sales in the Aeronautics Systems segment rose 6% in the third quarter of 2025, driven by ramp-up on the E-130J TACAMO and higher F-35 volume, partly offset by lower F/A-18 production. Operating income declined 1% as a softer margin offset higher sales. The operating margin slipped to 9.7% from 10.4%, reflecting lower net contract margin adjustments.

The Defense Systems segment posted a 14% sales increase, supported by higher volumes in armament and IBCS programs and growth in Sentinel, partially offset by the training services divestiture. Operating income rose 46%, with the margin improving to 11.4% from 8.9%, driven by favorable contract adjustments and a shift toward higher-margin, fixed-price work.

Sales in Mission Systems grew 10%, led by strength in restricted microelectronics, marine systems, and international radar programs. Operating income climbed 32%, with the margin expanding to 16.7% from 13.8% on higher Estimate at Completion (EAC) adjustments, including a $68 million favorable adjustment in restricted programs.

The Space Systems segment reported a 6% sales decline due to the wind-down of restricted space and NGI programs and lower SDA satellite volume, partly offset by growth in Commercial Resupply Services. Operating income fell 14%, with the margin decreasing to 11.0% from 12.0% on fewer favorable contract adjustments versus last year.

Outlook

For full-year 2025, Northrop Grumman ( NOC ) narrowed its outlook, trimming its sales guidance while raising its earnings forecast. The company now expects revenue between $41.7 billion and $41.9 billion, compared with its prior range of $42.05 billion to $42.25 billion, and below the analyst consensus of $42.17 billion.

However, Northrop lifted its Mark-to-Market (MTM) adjusted EPS guidance to $25.65 to $26.05 per share, up from the earlier range of $25.00 to $25.40, and above the Street estimate of $25.41 per share.

Aeronautics Systems now expects 2025 sales in the high $12 billion range, down from the prior low $13 billion estimate, with operating margins in the low-to-mid 6% range. Defense Systems sales are projected in the low $8 billion range, with margins improving to the high 10% range.

Mission Systems anticipates mid $12 billion in sales, slightly above earlier estimates, while maintaining healthy mid-14% margins. Space Systems are expected to generate mid-to-high $10 billion in sales, with operating margins around 10%.

“The momentum we are building in our business drove a strong third quarter performance to achieve our financial objectives for mid-single-digit growth, expanding segment margins, and growing cash flows year over year. As a result of this performance and our positive outlook for the remainder of the year, we are once again increasing our 2025 EPS guidance,” said Kathy Warden, chair, chief executive officer and president.

Price Action: NOC shares were trading lower by 1.33% to $594.01 premarket at last check Tuesday.

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