Northrop Grumman Corporation (NOC) — Q2 2026 Earnings Preview

1. Earnings Preview

Key Takeaway: The setup into Q2 2026 is a low bar with meaningful upside optionality — consensus has been reset lower post-Q1's guidance-hold disappointment, management guided explicitly for high single-digit sequential sales growth in Q2, and the F/A-XX downselect (expected August 2026) is an imminent binary catalyst that could re-rate the stock sharply higher.

Heading into Q2 2026, the bar for NOC is manageable: consensus revenue of ~$10.82B implies roughly 4.5% YoY growth, well within the company's full-year mid-single-digit guidance, and management's own Q2 directional guide of high single-digit sequential growth from Q1's $9.88B base points to a revenue print in the $10.7–11.0B range — suggesting consensus may be slightly conservative. The bigger swing factor is segment operating margin: consensus sits at 11.2%, above Q1's 10.8% actual, and the key question is whether the Space segment's Gen 63 XL EAC charge is fully contained (management said yes) and whether Mission Systems can sustain its 15%+ margin trajectory. On EPS, the Street at $6.81 is modestly above the post-Q1 baseline, but full-year EPS guidance of $27.40–$27.90 implies a back-half ramp that requires clean execution. The stock has underperformed the ITA defense ETF by ~18 points since Q1 earnings (NOC -14.6% vs ITA +3.4%), creating a low-expectations setup where a clean beat-and-raise could catalyze meaningful catch-up. The wildcard is the

F/A-XX downselect — with the Navy confirming an August 2026 decision between Boeing and Northrop Grumman, a NOC win on this multi-decade, potentially $100B+ program would be a transformational re-rating event; a loss would remove a key bull thesis but is likely already partially discounted given the stock's underperformance. Defense Systems' double-digit organic growth (fueled by Sentinel ramp and munitions demand) and the B-21 production rate increase agreement provide durable revenue visibility regardless of F/A-XX outcome.

2. KPIs & Consensus Expectations

Key Takeaway: Consensus is a low bar heading into Q2 2026 — management's own sequential guide implies revenue above the Street, and the margin bar (11.2% segment operating margin) is achievable given Q1's contained Space charge and Mission Systems' momentum. Segment operating margin is the bigger swing factor; a clean Space recovery and continued Mission Systems strength could drive a meaningful EPS beat.

Table 1 — Q2 2026 Current Quarter Snapshot (All Key KPIs)

Source: Visible Alpha Consensus and Actuals Data. All figures sourced from Visible Alpha; segment guidance from Q4 2025 and Q1 2026 earnings calls. YoY change for EPS reflects Q2 2025 included a large favorable EAC; Q2 2026 consensus reflects normalized run-rate.

Source: Visible Alpha Consensus and Actuals Data.

Table 2 — Beat/Miss History (Last 8 Quarters)

KPI 1: Total Sales

Pattern: NOC has beaten revenue consensus in 4 of the last 8 quarters, with misses concentrated in Q3 2024 through Q1 2025 (a period of Space segment headwinds and program transitions); the last two quarters show a return to beats, supporting a constructive setup.

KPI 2: Segment Operating Margin

Pattern: Excluding the Q1 2025 Sentinel EAC anomaly, NOC has beaten segment margin consensus in 5 of the last 7 comparable quarters; the Q1 2026 miss was driven by the Space Gen 63 XL charge, which management characterized as contained — setting up for a margin recovery in Q2.

Key Takeaway: Consensus is a

Key Takeaway: Consensus represents a

3. Guidance & Commentary Evolution

Key Takeaway: Full-year guidance was reaffirmed at Q1 2026 with no upward revision despite a revenue beat, but the CapEx raise to $1.85B (from $1.65B) for B-21 production acceleration was the key new disclosure; management's tone at the May 2026 Bernstein conference was constructively bullish, emphasizing accelerating growth into 2027 and a CapEx framework of ~4.5% of revenue for 2027–2028. The guidance-hold was the primary source of post-Q1 stock weakness, but the strategic narrative has strengthened.

Source: Q4 2025 and Q1 2026 NOC earnings call transcripts; May 2026 Bernstein Strategic Decisions Conference transcript.

Key Tone Shifts Since Last Earnings: At the May 2026 Bernstein conference, CEO Kathy Warden explicitly stated that the year-over-year revenue headwind from the two cancelled/lost Space programs is now fully behind the company as of Q1 2026, and expects accelerating growth with a mid-single digit or better trajectory going into 2027. She also highlighted ~150 satellites in backlog across SDA transport and tracking layers, and confirmed Defense Systems growth could reach into the 20s (from teens). The F/A-XX downselect was confirmed for August 2026 by both the CNO and Secretary Hegseth in HASC testimony, with the program funded in the FY26 budget and reconciliation bill.

Key Takeaway: Full-year guidance was reaffirmed at Q1 2026 with no upward revision despite a revenue beat, but the CapEx raise to $1.85B (from $1.65B) for B-21 production acceleration was the key new disclosure; management's tone at the May 2026 Bernstein conference was constructively bullish, emphasizing

Key Takeaway: Full-year guidance was reaffirmed at Q1 2026 with no upward revision despite a revenue beat, but the CapEx raise to $1.85B (from $1.65B) for B-21 production acceleration was the key new disclosure; management's tone at the May 2026 Bernstein conference was constructively bullish, emphasizing accelerating growth into 2027 and a CapEx framework of ~4.5% of revenue for 2027–2028.

4. Guidance vs. Estimate Revision Tracker

Key Takeaway: Estimates have been revised modestly lower since Q1 2026 earnings, reflecting the guidance-hold disappointment and CapEx increase, but the gap between consensus EPS ($27.91 FY2026) and guidance midpoint ($27.65) is narrow — suggesting the Street is not pricing in a guidance raise, which creates asymmetric upside if management lifts the bar at Q2.

Source: Visible Alpha Consensus and Actuals Data. Pre-Q1 estimates are approximate based on consensus trajectory; post-Q1 baseline from Visible Alpha as-of April 28, 2026.

Analysis: The estimate revision picture is relatively benign — the Street absorbed the Q1 guidance-hold by resetting FY2026 EPS ~$0.30 lower but has not continued to cut since. This suggests the market has largely priced in the CapEx headwind and is waiting for Q2 execution to determine whether a guidance raise is warranted. The FY2027 consensus of $30.24 implies ~8% EPS growth, which appears conservative given management's explicit commentary on accelerating top-line growth and margin tailwinds as programs transition to production.

5. Stock Performance

Key Takeaway: NOC has been a significant underperformer since Q1 2026 earnings, declining ~14.6% (from $611 to $522) vs. the ITA defense ETF which is up ~3.4% over the same period — an ~18-point gap that reflects investor frustration with the guidance-hold and CapEx increase, but also creates a low-expectations setup heading into Q2 where a clean beat-and-raise could drive meaningful catch-up.

NOC vs. ITA Defense ETF — Indexed to 100 at Q1 2026 Earnings (April 21, 2026). Source: Stock Price Data.

Source: Stock Price Data.

Stock Setup Analysis: At $521, NOC trades at approximately 18.7x FY2026 consensus EPS of $27.91 and 17.2x FY2027 consensus EPS of $30.24 — a meaningful discount to its 5-year average P/E of ~20x and to peers like LMT (~18x) and RTX (~22x). The de-rating reflects the CapEx overhang and FCF compression during the B-21 investment cycle, but the stock appears to be pricing in a sustained period of below-average returns rather than the temporary investment trough management describes. A Q2 beat with any guidance raise — particularly on EPS or FCF — could be the catalyst to close the peer gap.

Key Takeaway: NOC has been a significant underperformer since Q1 2026 earnings, declining

Key Takeaway: NOC has been a significant underperformer since Q1 2026 earnings, declining ~14.6% (from $611 to $522) vs. the ITA defense ETF which is up ~3.4% over the same period — an ~18-point gap that reflects investor frustration with the guidance-hold and CapEx increase, but also creates a

6. Material News & Developments (Since Q1 2026 Earnings)

Key Takeaway: The post-Q1 period has been dominated by three themes: the B-21 production rate increase agreement and associated CapEx commitment, the F/A-XX downselect timeline confirmation (August 2026), and broad-based munitions demand acceleration driven by the Iran conflict and elevated operational tempo — all of which are net positives for NOC's long-term revenue trajectory.

• B-21 Production Rate Increase Agreement (Q1 2026 Earnings, Apr 21): NOC finalized a production rate increase agreement with the Air Force, committing to ~$2.5B in total company-funded investment for B-21 production facilitation (majority weighted 2027–2029). 2026 CapEx guidance raised $200M to $1.85B. Management confirmed B-21 ROIC is now expected to be meaningfully above cost of capital over the program life.
• Dividend Increase (May 21, 2026): Board increased the quarterly dividend by ~7%, explicitly tied to year-over-year operating cash growth. Signals management confidence in cash generation even during the elevated CapEx period.
• Bernstein Strategic Decisions Conference (May 28, 2026): CEO Kathy Warden provided key updates: (1) Defense Systems growth expected to continue at least in the teens, potentially into the 20s; (2) Space segment year-over-year headwind from cancelled programs fully behind the company as of Q1 2026; (3) 2027–2028 CapEx framework of ~4.5% of revenue disclosed; (4) E-2D demand increased with Navy requesting 12 additional aircraft due to Iran/Venezuela operational tempo; (5) Golden Dome C2 selection confirmed for NOC.
• F/A-XX Downselect Timeline Confirmed (Multiple Sources): Both the CNO and Secretary Hegseth confirmed in HASC testimony that the F/A-XX downselect is expected in August 2026. Boeing and Northrop Grumman are the two remaining finalists. The program is funded in the FY26 budget and reconciliation bill. This is the single largest near-term binary catalyst for NOC.
• Iran Conflict / Munitions Demand Acceleration: The Iran conflict has driven broad munitions replenishment urgency across the portfolio. The reconciliation bill allocates significant resources to build more munitions quickly. NOC's weapons business is nearing 10% of total company sales, and missile defense accounts for nearly 10% of company sales — both growing rapidly.
• Sentinel ICBM Program Milestones: Management cited concrete milestones: Milestone B decision expected later in 2026, first flight in 2027, initial operating capability in the early 2030s. Sentinel is ~6–7% of company revenue and expected to continue ramping throughout 2026.
• Q2 2026 Earnings Date Announced (Jun 18, 2026): NOC announced Q2 2026 results will be released on July 22, 2026, with a webcast.

7. Peer Commentaries — Read-Through for Q2 2026

Key Takeaway: Peer Q1 2026 earnings calls and May 2026 conference commentary are uniformly bullish on the defense demand environment — elevated operational tempo, munitions replenishment urgency, international demand acceleration, and missile defense growth are consistent themes across LMT, RTX, LHX, and GD that all read positively for NOC's Q2 setup. The one nuance is that RTX's preliminary Q2 results (July 9) showed strong defense performance, which is a direct positive read-through.

RTX (Raytheon Technologies) — Q1 2026 Earnings (Apr 21) & Bernstein Conference (May 29) & Q2 Preliminary Results (Jul 9)

Relevance to NOC: RTX is the most direct read-through peer given overlapping missile defense, munitions, and space exposure. RTX raised its full-year 2026 outlook for adjusted sales and EPS following a strong Q1, citing continued defense strength. Key read-throughs:

• Missile Defense Demand: RTX's Raytheon segment highlighted strong demand for Patriot/PAC-3 interceptors, with an agreement to expand PAC-3 seeker production in Huntsville enabling a 'massive increase in supply.' This validates NOC's missile defense business (nearly 10% of sales) as a durable growth vector.
• Defense Budget Confidence: RTX management expressed confidence in continued defense strength and raised full-year guidance, citing the elevated threat environment and allied demand. RTX noted significant budget increases for key programs. This is a direct positive read-through for NOC's defense budget exposure.
• International Demand: RTX highlighted broad-based international demand, particularly from Europe and the Middle East, driven by the Iran conflict and elevated operational tempo. NOC's international growth thesis (double-digit sustained growth expected) is validated.
• Q2 2026 Preliminary Results (Jul 9): RTX provided preliminary Q2 2026 results showing strong defense performance, which is a direct positive read-through for NOC's Q2 print. Defense demand remained robust through the quarter.

LMT (Lockheed Martin) — Q1 2026 Earnings (Apr 23) & Bernstein Conference (May 27)

Relevance to NOC: LMT is the closest structural peer (large defense prime, similar program mix). LMT's Q1 2026 results and conference commentary provide the most direct read-through on the defense demand environment, budget dynamics, and program execution.

• Defense Budget Environment: LMT management expressed confidence in the defense budget outlook, citing strong bipartisan support for national security spending and the $1.15T budget submitted by the President. This directly validates NOC's guidance framework and growth acceleration thesis into 2027.
• Munitions & Weapons Demand: LMT highlighted accelerating demand for missiles and weapon systems (PAC-3, JASSM, LRASM), driven by the Iran conflict and allied replenishment needs. NOC's weapons business (nearing 10% of sales) and Defense Systems segment (expected teens-to-20s growth) benefit from the same demand tailwinds.
• International Sales Acceleration: LMT noted strong international demand, particularly from Europe and the Middle East. NOC's international growth narrative (double-digit sustained growth) is corroborated.
• F-35 Program: LMT's F-35 commentary is relevant to NOC's Mission Systems segment, which produces the F-35 radar (AESA). Any F-35 production rate commentary from LMT provides context for NOC's radar production ramp.

LHX (L3Harris Technologies) — Q1 2026 Earnings (Apr 30) & Bernstein Conference (May 27)

Relevance to NOC: LHX overlaps with NOC in mission systems, electronic warfare, and space. LHX's Q1 2026 results and Bernstein commentary provide read-through on mission systems demand and margin dynamics.

• Mission Systems Demand: LHX highlighted strong demand for electronic warfare, communications, and ISR systems, driven by elevated operational tempo and allied demand. This validates NOC's Mission Systems segment growth trajectory and margin expansion thesis (consensus at 14.68% for Q2, above the 14% guidance).
• Space Segment: LHX's space commentary is relevant to NOC's Space Systems segment. Any commentary on SDA (Space Development Agency) program execution and satellite production rates provides context for NOC's ~150 satellites in backlog.
• Operational Tempo Impact: LHX noted unprecedented operational tempo driving immediate demand for support, sustainment, and replenishment. This is consistent with NOC's commentary and validates the near-term demand acceleration thesis.

GD (General Dynamics) — Q1 2026 Earnings (Apr 29)

Relevance to NOC: GD's defense segments (Combat Systems, Mission Systems) provide read-through on defense budget execution and program award timing.

• Defense Budget Execution: GD's Q1 2026 results provided commentary on defense budget execution and program award timing, which is relevant to NOC's book-to-bill trajectory. GD's Combat Systems segment performance provides context for the broader defense demand environment.
• Backlog & Awards: GD's backlog commentary is relevant to NOC's book-to-bill expectations. Consensus expects NOC's Q2 book-to-bill at 0.93x (below 1.0x), but a strong awards quarter driven by Sentinel, B-21, or international programs could surprise to the upside.

Peer Read-Through Summary Table

Source: LHX Q1 2026 earnings call transcript (Apr 30, 2026); LMT Q1 2026 earnings call transcript (Apr 23, 2026); RTX Q1 2026 earnings call transcript (Apr 21, 2026); RTX Q2 2026 Preliminary Results (Jul 9, 2026); GD Q1 2026 earnings call transcript (Apr 29, 2026); BA Q1 2026 earnings call transcript (Apr 22, 2026); LHX, LMT, RTX, BA Bernstein Strategic Decisions Conference transcripts (May 27–29, 2026). Note: Only commentary about Q2 2026 current quarter trends or post-Q1 2026 forward-looking commentary is included; prior-quarter result discussions are excluded.

8. Insider Transaction Activity

Key Takeaway: Insider activity since Q1 2026 earnings is minimal and not directionally meaningful — the only transaction on record is a small planned sale by a Director under a 10b5-1 plan, which is routine and carries no informational signal about management's view of Q2 prospects.

Source: Insider Transaction Data (Form 4 Filing — Welsh Mark A III, NOC, filed May 5, 2026).

Analysis: The sole insider transaction since Q1 2026 earnings is a small 95-share sale by Director Mark Welsh under a pre-established 10b5-1 trading plan. 10b5-1 sales are scheduled in advance and are not indicative of the insider's current view on the stock. The absence of any open-market purchases or non-plan sales by senior management (CEO, CFO, or other executives) is neutral — it neither confirms nor contradicts the bull thesis. The lack of insider buying at current depressed levels (~$521, down ~14.6% from pre-earnings highs) is worth noting but is not unusual given the pending F/A-XX decision and associated quiet period considerations.

9. Key Risks & Considerations

Key Takeaway: The primary downside risks are another Space segment EAC charge, a further guidance-hold without a raise, and an F/A-XX loss; the primary upside risks are a guidance raise, F/A-XX win, and accelerating international awards.

— End of NOC Q2 2026 Earnings Preview —