Why Northrop Grumman Stock Rallied Today
Key Points
Northrop Grumman helps to supply several key weapons systems to the U.S. government.
The defense contractor's backlog climbed to nearly $110 billion.
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Shares of Northrop Grumman (NYSE:NOC) rose more than 4% on Tuesday after the aerospace giant highlighted the rising demand for its national security-related products.
The B-21 Raider. Image source: Northrop Grumman.
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Arming America and its allies
Northrop's sales grew 7% year over year to $11.1 billion in the third quarter. Growth was driven by a 14% jump in aeronautics systems revenue to $3.6 billion and a 12% rise in defense systems sales to $2.3 billion.
Sales related to the B-21 stealth bomber, F-35 strike fighter, and Sentinel missile contributed to Northrop's gains.
All told, Northrop's net earnings increased 2% to $1.1 billion, or $7.89 per share. That topped Wall Street's expectations, which had called for per-share profits of $7.18.
Defense spending is set to rise
Conflicts in Ukraine and the Middle East are driving the U.S. military and its allies to invest more in defense-related technology.
Net awards of $16.4 billion in the third quarter brought Northrop's order backlog to $109.6 billion.
The defense contractor, in turn, expects full-year net sales of $44 billion in 2026. Management also projects adjusted earnings per share of $29.35 to $29.75 and free cash flow of $3.1 billion to $3.5 billion.
"Globally, we continue to witness unprecedented levels of demand for defense capabilities," CEO Kathy Warden said during a conference call with analysts.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Northrop Grumman. The Motley Fool has a disclosure policy.
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