AI Takeaway
Northrop Grumman’s Q2 FY2026 revenue rose 5.1% to $10.876B, but operating income fell 23.1% to $1.096B as the prior-year training-services divestiture gain did not recur and Defense and Space program profitability weakened, partly offset by a sharply lower tax rate.
Revenue
$10.88B
++5.07% YoY
EPS (Basic)
$7.70
-5.75% YoY
Operating Income
$1.1B
-23.09% YoY
Filed · Source: SEC EDGAR 10-Q filing
Northrop Grumman (NOC) reported Q2 FY2026 revenue of $10.88B, up 5.1% year over year. The company posted net income of $1.09B, down 6.8% from a year earlier, with diluted EPS of $7.68.
Q2 FY2026 sales increased $525M, or 5%, to $10.876B, with sales higher across all four sectors. Aeronautics Systems rose 13% to $3.519B, driven by higher B-21 and other restricted-program volume, a $106M TACAMO increase, and higher B-2, F-35, and E-2 volume; completed F/A-18 production deliveries partly offset the growth.
Source: 10-Q Item 2 MD&A, p.25, p.28
Operating income declined $329M, or 23%, to $1.096B and operating margin fell to 10.1% from 13.8%. The decline principally reflected the absence of the prior-year $231M gain on the training-services divestiture, $61M lower segment operating income, and a $56M reduction in the FAS/CAS operating adjustment.
Source: 10-Q Item 2 MD&A, p.25
Defense Systems operating margin fell to 7.5% from 12.7%, including a $68M unfavorable EAC adjustment on SiAW related to higher projected production-maturation and development/qualification costs; Space Systems margin declined to 8.6% from 10.6%, including a $91M unfavorable EAC adjustment on GEM 63XL largely related to higher projected cost to complete.
Source: 10-Q Item 2 MD&A, p.29-p.31
Northrop expects to invest about $2.5B over multiple years to expand B-21 production capacity after reaching a first-quarter agreement with the U.S. Air Force to increase production rates; it expects improved returns on LRIP and NTE phases, although it has previously recognized about $2.0B of cumulative LRIP losses. On Sentinel, joint work with the Air Force resulted in further definition and authorization of the execution plan and a $7.6B increase in program backlog during Q2 FY2026.
Source: 10-Q Item 2 MD&A, p.23-p.24
Q2 FY2026 income-tax expense fell $179M, or 71%, and the effective tax rate declined to 6.3% from 17.7%, principally due to remeasurement of uncertain tax positions as the IRS moved toward resolving previously filed federal tax returns and refund claims. This lower tax expense partly mitigated the operating-income decline, leaving net earnings down 7% to $1.094B.
Source: 10-Q Item 2 MD&A, p.25-p.26
Q2 FY2026 operating margin declined to 10.1% from 13.8% year over year, while operating income fell 23.1% to $1.096B despite revenue growth. This indicates that higher sales did not translate proportionately into profitability during the quarter.
Source: 10-Q Income Statement (XBRL)
Defense Systems operating income fell 38% to $156M and Space Systems operating income fell 16% to $236M in Q2 FY2026. The weaker performance coincided with lower segment margins, indicating exposure to unfavorable program economics and execution costs within these businesses.
Source: 10-Q Income Statement (XBRL)
Operating cash flow was negative $376M for the cumulative fiscal year-to-date period, although this improved from negative $697M in the comparable prior-year period. Continued negative operating cash generation can increase reliance on existing liquidity or external funding for operations, investment, and shareholder distributions.
Source: 10-Q Cash Flow Statement (XBRL)
Long-term debt was $14.428B and debt-to-equity was 1.84x, while the current ratio was 1.17x at the reporting date. Although current assets exceeded current liabilities, these measures indicate meaningful leverage and relatively limited short-term balance-sheet cushion.
Source: 10-Q Balance Sheet (XBRL)
Cumulative fiscal year-to-date share buybacks declined 92.4% year over year to $68M from $891M. The reduction may indicate that capital allocation toward repurchases was materially lower than in the comparable period.
Source: 10-Q Cash Flow Statement (XBRL)
Reported EPS of $7.68 versus the $6.89 analyst consensus — a +11.5% beat for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $10.88B | $10.35B | +5.07% |
Operating Income | $1.1B | $1.43B | -23.09% |
Net Income | $1.09B | $1.17B | -6.81% |
EPS (Basic) | $7.70 | $8.17 | -5.75% |
EPS (Diluted) | $7.68 | $8.15 | -5.77% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $50.76B | $49.45B | +2.65% |
Current Assets | $15.59B | $14.03B | +11.15% |
Total Liabilities | $32.88B | $33.98B | -3.24% |
Current Liabilities | $13.35B | $13.46B | -0.85% |
Stockholders' Equity | $17.88B | $15.47B | +15.60% |
Cash & Equivalents | $2.31B | $1.9B | +21.48% |
Long-Term Debt | $14.43B | $15.16B | -4.83% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $-376M | $-697M | +46.05% |
Investing Cash FlowYTD | $-364M | $-191M | -90.58% |
Financing Cash FlowYTD | $-1.36B | $-1.57B | +13.41% |
Share BuybacksYTD | $68M | $891M | -92.37% |
D&A | $367M | $350M | +4.86% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 10.1% | 13.8% | -3.69% |
Net Margin | 10.1% | — | — |
ROE | 6.1% | — | — |
ROA | 2.2% | — | — |
Current Ratio | $1.168 | — | — |
Debt to Equity | $1.838 | — | — |
Expected release date, analyst estimates & what to watch
Northrop Grumman (NOC) delivered strong Q1 FY2026 results with revenue up 4.4% to $9.88B and net income surging 81.9% to $875M, driven by significant margin expansion, though operating cash flow remained negative at -$1.66B.
Northrop Grumman (NOC) delivered steady FY2025 results with revenue growing 2.2% to $41.95B and net income essentially flat at $4.18B, supported by strong operating cash flow of $4.76B and disciplined balance sheet management.
Other companies in Aerospace & Defense
Northrop Grumman’s Q2 FY2026 revenue increased 5.1% year over year to $10.876B from $10.351B. Growth occurred across all four sectors, with Aeronautics Systems up 13% to $3.519B, supported by B-21, TACAMO, B-2, F-35, and E-2 activity. Source: 10-Q Item 2 MD&A, p.25, p.28.
Operating income declined 23.1% to $1.096B, and operating margin fell to 10.1% from 13.8%. The company attributed the decrease mainly to the absence of a $231M prior-year gain on the training-services divestiture, lower segment operating income, and a less favorable FAS/CAS operating adjustment. Source: 10-Q Item 2 MD&A, p.25.
Diluted EPS fell 5.8% to $7.68 from $8.15, as net earnings declined 7% to $1.094B. Lower operating income was partly offset by income-tax expense falling $179M and the effective tax rate declining to 6.3% from 17.7%. Source: 10-Q Item 2 MD&A, p.25-p.26.
Defense Systems recorded a $68M unfavorable EAC adjustment on SiAW because of higher projected costs to mature production and to develop and qualify the program. Space Systems recorded a $91M unfavorable EAC adjustment on GEM 63XL, largely related to higher projected cost to complete; these items contributed to sector margin declines. Source: 10-Q Item 2 MD&A, p.29-p.31.
The provided Q2 FY2026 filing data does not include analyst consensus revenue or EPS estimates, so an estimate beat or miss cannot be determined from this filing. Reported diluted EPS was $7.68 and revenue was $10.876B. Source: 10-Q Item 2 MD&A, p.25.