Northrop Grumman backlog hits $109.6B on 1.5x book-to-bill, guidance raised, shares up about 5%

Northrop Grumman reported third-quarter sales of $11,122 million, up 7%, and a record backlog of $109,597 million, up 15% from $95,681 million a year earlier. Nasdaq data showed the stock at $535.38 at 1:23 PM ET, up $24.73, or 4.84%.

The headline numbers

From Northrop's earnings release:

• Net awards: $16 billion, a book-to-bill ratio of 1.5x.
• Diluted EPS: $7.89, up 3% from $7.67. This is the GAAP figure.
• Segment operating margin: 12.1%, down from 12.3%, which the company ties to a $68 million favorable adjustment a year ago in a Mission Systems microelectronics portfolio.
• Sales by sector: Aeronautics $3,575 million (+14%), Defense Systems $2,307 million (+12%), Mission Systems $3,155 million (+2%), Space Systems $2,749 million (+2%).

What drove growth

Aeronautics grew on a $195 million increase in F-35 sales, which Northrop attributes to the timing of material costs on production lots and higher sustainment, plus higher B-21 and B-2 sustainment. Defense Systems grew on a $180 million increase on Sentinel as that program ramps, and on GMLRS ER and solid rocket motor volume.

The guidance change

The midpoints move by $65 million for segment operating income and 70 cents for EPS, matching the company's own summary.

The number behind the number

Adjusted free cash flow was $1,810 million against $1,256 million a year ago, up 44%. But the release shows how it is built: operating cash flow of $1,745 million, less $306 million of capital spending, plus $371 million of proceeds from the sale of equipment to a customer. Without that receipt the figure would be about $1,439 million, still higher than last year, by our arithmetic. The same line was zero in the 2025 quarter.

Backlog is also narrower than it sounds. The company says it excludes unexercised options and IDIQ contracts, and only $50.1 billion of the $109.6 billion is funded, meaning authorised and appropriated.

Why the stock may be moving

We did not find an explanation from the company or a wire report for today's move, so we won't offer one. The facts available are the record backlog, a raised EPS outlook, and the contrast with the Navy F/A-XX decision we covered on September 29, when Boeing won the fighter contract. A Schwab Network segment this morning called the revenue a slight miss against estimates; we could not verify analyst consensus independently, so we do not state it.

Sources: Northrop Grumman third-quarter 2026 earnings release (SEC EDGAR); Nasdaq quote data at 1:23 PM ET, October 20, 2026; Northrop filings on SEC EDGAR. MTM-adjusted EPS and adjusted free cash flow are non-GAAP measures. This is market information, not investment advice.