Northrop Grumman
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Northrop Grumman Company Stability & Growth
This page was generated by Built In using publicly available information and AI-based analysis of common questions about the company. It has not been reviewed or approved by the company.
What's the stability & growth outlook for Northrop Grumman?
Strengths in profitability, cash generation, and market positioning are accompanied by softer top‑line pacing, program‑execution headwinds, and high exposure to U.S. government demand. Together, these dynamics suggest a resilient, cash‑generative profile with near‑term revenue variability as large programs progress and awards convert from a sizable backlog.
Positive Themes About Northrop Grumman
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Profitability: EPS and margins improved in Q3 2025 (EPS up 10% to $7.67; segment operating margin about 12.3%) and full‑year EPS guidance was raised, reflecting stronger earnings power. Net earnings and operating income rose meaningfully in 2024, and management points to continued margin expansion into 2026.
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Healthy Cash Flow: Free cash flow increased sharply in Q3 2025 and is guided for double‑digit growth, with projections to roughly double by 2028. Management underscores disciplined capital returns, committing to return all free cash flow via dividends and buybacks.
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Strong Market Position & Advantage: A record ~$91–93B backlog, top‑five contractor status, and prime roles on programs like B‑21, Sentinel, Next‑Gen OPIR, and GPI underpin durable demand. New awards (e.g., Space Force satellite refueling, OPIR extension) and international sales growth further reinforce competitive positioning.
Considerations About Northrop Grumman
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Stagnant Revenue: Full‑year 2025 sales guidance was trimmed and several periods showed revenue misses or slight year‑over‑year declines, with Space Systems down and overall growth modest. Trailing revenue was roughly flat, indicating slower top‑line momentum despite strong orders.
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Operational Inefficiency: Execution pressures surfaced on flagship programs, including a sizable B‑21 loss charge to revamp production and cost/schedule growth on Sentinel requiring restructure. These dynamics weighed on near‑term segment profitability and highlight cost‑curve risk during production ramps.
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Concentrated Customer Base: The vast majority of revenue derives from long‑term U.S. government and Pentagon programs, making results sensitive to award timing and policy disruptions. Management cautioned that prolonged government funding delays or shutdowns could affect sales cadence and cash.
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