Northrop Grumman Corp.

Strong execution; backlog and book-to-bill signal durable growth - Q3 sales: $11.1B (+7% YoY); EPS: $7.89 (+3% YoY). - Book-to-bill: 1.5x (1.45x YTD) → record backlog $110B (+20% YoY). - Operating performance: segment operating margin rate ~12.1% (company-level discussion) with disciplined program execution across most areas. - Good (investor positive): backlog growth + margin delivery together support visibility into future earnings.

Updated 2026 guidance raised (midpoint) + strong cash generation - Full-year 2026 sales: $43.75B–$44.25B (reaffirmed range). - 2026 segment operating income: raised midpoint by ~$65M, implying ~11.3% segment operating margin at the midpoint. - 2026 EPS: raised by $0.70 (driven by higher segment performance and a lower tax rate; partly offset by higher corporate unallocated costs + interest). - Adjusted free cash flow (FCF) guidance: $3.1B–$3.5B (maintained). - Q3 cash: Adjusted FCF $1.8B (+40% YoY), supported by working capital improvements and $371M proceeds from sale of a test asset. - Good: guidance raise + continued FCF range maintained despite capital investment needs.

2027 outlook: growth accelerates (5%–7%) with margin expansion; watch capital intensity - 2027 sales growth: 5%–7% (faster than 2026 expectation), with growth across all four segments. - Margin outlook: segment operating income expected to grow faster than sales with 10–20 bps of margin expansion beyond the 2026 midpoint. - CapEx 2027: ~$2.1B (about 4.5% of sales) to support B-21 production acceleration. - 2027 adjusted FCF: $3.3B–$3.7B—Company says higher capital intensity is offset by stronger operations, disciplined working capital, and tax optimization. - Potential “low-end vs high-end” driver (important): breadth of confidence tied to execution and contracting pace; leadership said low end reflects being earlier in budgeting cycle, high end assumes continued strong execution.