Northrop raised its full-year adjusted earnings guidance to a range of $29.35 to $29.75 after reporting fiscal 2026 third-quarter sales of $11.1 billion, up from $10.4 billion a year earlier. Earnings per share were $7.89, topping the average adjusted and diluted EPS estimate of $7.17 from analysts surveyed by Bloomberg, while net earnings were essentially flat at $1.1 billion.
The company said the guidance increase reflects a 7% sales boost in the fiscal 2026 third quarter. Shares were up nearly 4% in premarket trading following the update.
Sales rose across all four segments. In Aeronautics Systems, revenue increased 14% year over year, led by an additional $195 million on the F-35 program tied to when material costs hit and more sustainment activity, plus higher B-21 Raider sales and extra B-2 bomber sustainment work. Defense Systems advanced 12%, aided by an extra $180 million tied to the Sentinel program as it scales up, higher throughput on the Guided Multiple Launch Rocket System Extended Range line, and expanded production across several tactical solid rocket motor programs.
New bookings totaled $16.4 billion for the quarter, with $4.6 billion earmarked for restricted work across the Aeronautics, Space and Mission Systems segments. Total backlog is now $109.6 billion. "I'm confident our new record backlog, well-positioned portfolio and investments, and industry-leading performance will continue to drive sales and earnings growth in our 2027 outlook," CEO Kathy Warden said.
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Operating income in the quarter edged up 2%. That growth was dampened by a $52 million drop tied to a pension-related accounting adjustment, which pulled the operating margin down to 11.4%, compared with 11.9% a year earlier.
The period unfolded against a backdrop of ongoing conflicts in Ukraine and the Middle East that have bolstered demand for U.S. defense suppliers. Earlier this year, the Pentagon urged contractors to boost output of key weapons amid stockpile concerns and is pressing Congress to pass a record $1.5 trillion defense budget for fiscal 2027.
Stronger sales, a record backlog, and a guidance raise point to steadier cash flows across Northrop's major programs. The mix matters too: momentum in F-35 sustainment and Sentinel, alongside B-21 progress and restricted awards in Aeronautics, Space and Mission Systems, supports multi-year visibility. The bottom line: margin noise from pension accounting aside, the demand picture remains firm, and that is what the market rewarded before the open.
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