Northrop Grumman tops estimates as defense spending fuels Q4 growth
Aerospace contractor posts $11.7 billion in revenue, beats earnings expectations despite weaker 2026 outlook
Northrop Grumman delivered stronger-than-expected fourth-quarter results, benefiting from robust US defense spending and modernization priorities, though shares slipped in early trading amid concerns about the company's fiscal 2026 guidance.
The Virginia-based aerospace and defense contractor reported adjusted earnings per share of $7.23 for the quarter ended December 2025, exceeding the Zacks Consensus Estimate of $7 per share. Revenue reached $11.71 billion, surpassing analyst projections of approximately $11.63 billion.
The quarterly performance represents significant year-over-year growth, with earnings increasing 13% from $6.39 per share in the prior-year quarter and revenue climbing 9.5% from $10.69 billion. Northrop Grumman has now beaten earnings estimates in three of the past four quarters, demonstrating consistent operational momentum.
Despite the solid quarterly results, shares declined roughly 2% in premarket trading after the company provided a softer outlook for 2026. The company's guidance fell short of some investor expectations, prompting a cautious market reaction even as underlying business fundamentals remain strong.
The earnings beat comes at a pivotal moment for the defense sector. The US Senate is advancing an $839 billion defense appropriations bill for fiscal year 2026, with additional supplemental funding expected to push total defense spending close to $1 trillion. Key investment areas include missile defense systems, electronic warfare capabilities, shipbuilding, and nuclear deterrence—all segments where Northrop Grumman maintains significant market presence.
"The aerospace and defense sector is prioritizing resilience, autonomy, and digital integration, with emerging trends including space defense systems, hypersonic platforms, and cyber-resilient infrastructure," according to industry analysts at Deloitte. These trends align closely with Northrop Grumman's portfolio, which spans autonomous systems, cybersecurity, C4ISR, and space operations.
From a technical perspective, Northrop Grumman's stock continues to trade above key support levels. The shares are positioned above both the 50-day moving average of $577.26 and the 200-day moving average of $551.11, suggesting underlying strength despite the recent pullback. The stock closed Monday at $660.97, giving the company a market capitalization of approximately $95.5 billion.
Analyst sentiment remains largely positive, with Wall Street maintaining a favorable outlook on the defense contractor. The consensus target price stands at $673.72, representing modest upside from current levels. Recent analyst actions include UBS maintaining a Buy rating with a $777 price target and Citigroup reaffirming its Buy stance with a $715 target, while Truist Securities downgraded to Hold with a $623 target earlier this month.
Looking ahead, the company faces both opportunities and challenges. The massive US defense budget provides a stable foundation for growth, particularly in high-priority areas like missile defense and hypersonic weapons. However, the softer 2026 guidance suggests potential headwinds, possibly related to program timing, supply chain constraints, or budget allocation uncertainties.
For the first quarter of 2026, analysts project earnings of $6.24 per share on $10 billion in revenue, with full-year expectations at $28.78 per share on $43.98 billion in sales. These figures will be closely watched as investors assess whether Northrop Grumman can sustain its momentum while navigating evolving defense priorities and geopolitical pressures.
The company is scheduled to host its earnings conference call at 9:30 a.m. Eastern time, where management will likely provide additional color on the 2026 outlook and key program developments. Investors will be listening for details on contract wins, backlog growth, and the company's strategic positioning in emerging defense technologies.