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Call sheet · Q2'26

Northrop Grumman (NOC)

Q2'26 earnings call · held July 21, 2026 · compared with the Q1'26 call · management-credibility review
9/12
Disclosure score
1 high, 3 medium, 2 low flags
Financial quality
Bottom line
The sleeper story is NOC quietly becoming the West's munitions dealer with $10B in multiyear agreements while everyone fixates on two problem programs. The obvious 1.84x book-to-bill sounds spectacular until you realize supply chain constraints are the binding constraint, not demand, which caps growth at mid-single digits. Management's telling quote: 'We have the capacity; we need to get that on contract and start producing' reveals they built it but customers aren't committing fast enough. My view changes if they demonstrate ability to convert backlog above 25% annually or if supply chain bottlenecks clear.

The 30-second version

  • The sleeper: Stand-in Attack Weapon took a $68M charge but they're doubling down on tactical missiles with $10B in framework agreements
  • Book-to-bill of 1.84x crushes expectations but conversion timing is the binding constraint
  • GEM 63XL program quietly bleeding: another unfavorable EAC after Q1's launch anomaly

What changed this quarter

MetricQ1'26Q2'26Change
Revenue$9.9B (up 5% YoY)$10.9B (up 5% YoY)Steady 5% growth maintained
EPS$6.14$7.68+25% sequential surge
Operating Income$1.07B$1.06BSlight decline despite revenue growth
Segment Operating Margin10.8%9.7%-110 bps compression
Backlog$96B$105B+$9B sequential add
Book-to-Bill0.99x1.84xExplosive demand signal
Aeronautics Margin9.3%10.3%+100 bps improvement
Defense Systems Margin9.7%7.5%-220 bps deterioration
Mission Systems Margin15.1%15.4%+30 bps expansion
Space Margin7.1%8.6%+150 bps recovery but still weak

Accountability tracked

7 new promises made4 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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