Northrop Grumman Corporation Q2 2026 Earnings Recap

Northrop Grumman's shares were essentially unchanged, rising a modest 0.3% following Q2 earnings that featured solid bookings and backlog growth but were weighed down by margin pressure from two key programs and elevated costs in missile qualification testing.

Key Takeaways

• Net orders reached $20 billion, driving a high book-to-bill ratio of 1.84x and lifting backlog to a record $105 billion.
• Sales rose 5% across all four segments, supporting the company’s guidance for accelerating sales growth in the second half.
• Operating margins were lower in Defense Systems (DS) and Space segments due to negative estimate at completion (EAC) adjustments on the GEM 63XL rocket motor and Stand-in Attack Weapon (SiAW) programs.
• The GEM 63XL anomaly is being addressed with a redesigned component, successfully tested in a static fire, expected to begin deliveries by year-end.
• Despite margin headwinds, Northrop raised full-year sales guidance to about $44 billion and increased EPS forecasts by $1.20, maintaining margin expectations overall.