Northrop Grumman Corporation (NYSE:NOC) delivered third-quarter earnings that exceeded Wall Street expectations, even though revenue came in slightly below forecasts, with strong operating performance across key segments supporting profitability.
The defense and aerospace group posted adjusted earnings of $7.67 per share, beating analyst estimates of $6.46 by $1.21. Quarterly revenue climbed 4% year over year to $10.42 billion but missed the $10.71 billion consensus. Organic sales rose 5% compared with the same period last year. Following the release, shares fell 1.3%.
“The momentum we are building in our business drove strong third quarter performance to achieve our financial objectives for mid-single-digit growth, expanding segment margins, and growing cash flows year over year,” said Kathy Warden, chair, chief executive officer and president. “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.”
The company’s operating margin improved to 11.9% from 11.2% a year earlier, while segment operating margin expanded to 12.3% from 11.5%. Net earnings increased 7% to $1.1 billion, up from $1.0 billion in Q3 2024.
By business unit, Mission Systems delivered standout results, with operating income surging 32% to $515 million on 10% higher sales. Defense Systems also saw strong momentum, with operating income jumping 46% to $234 million as sales advanced 14%. Space Systems underperformed, with sales and operating income down 6% and 14% respectively, reflecting the wind-down of restricted space programs.
Northrop Grumman raised its 2025 adjusted EPS guidance to a range of $25.65–$26.05, up from $25.00–$25.40 and above the analyst consensus of $25.42. However, it trimmed its full-year revenue outlook to $41.7–$41.9 billion from $42.05–$42.25 billion, below the expected $42.19 billion.
Free cash flow surged 72% to $1.26 billion during the quarter, while net awards increased to $12.2 billion, resulting in a book-to-bill ratio of 1.17 — signaling solid demand and sustained business momentum heading into year-end.