Security and aerospace company Northrop Grumman (NYSE: NOC) beat Wall Street’s revenue expectations in Q2 CY2026, with sales up 5.1% year on year to $10.88 billion. The company expects the full year’s revenue to be around $44 billion, close to analysts’ estimates. Its GAAP profit of $7.68 per share was 12.6% above analysts’ consensus estimates.

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Company Overview

Responsible for the development of the first stealth bomber, Northrop Grumman (NYSE: NOC) specializes in providing aerospace, defense, and security solutions for various industry applications.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Northrop Grumman’s 2.7% annualized revenue growth over the last five years was sluggish. This fell short of our benchmarks and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Northrop Grumman’s annualized revenue growth of 2.6% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak.

We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Northrop Grumman’s organic revenue averaged 5.8% year-on-year growth. Because this number is better than its two-year revenue growth, we can see that some mixture of divestitures and foreign exchange rates dampened its headline results.

This quarter, Northrop Grumman reported year-on-year revenue growth of 5.1%, and its $10.88 billion of revenue exceeded Wall Street’s estimates by 0.5%.

Looking ahead, sell-side analysts expect revenue to grow 6% over the next 12 months. While this projection suggests its newer products and services will fuel better top-line performance, it is still below the sector average.

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Operating Margin

Northrop Grumman’s operating margin has more or less stayed the same over the last 12 months , averaging 9.6% over the last five years. This profitability was higher than the broader industrials sector, showing it did a decent job managing its expenses.

Analyzing the trend in its profitability, Northrop Grumman’s operating margin might have fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Northrop Grumman generated an operating margin profit margin of 10.1%, down 3.7 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

Northrop Grumman’s weak 2.6% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Northrop Grumman’s two-year annual EPS growth of 43.3% was fantastic and topped its 2.6% two-year revenue growth.

Diving into Northrop Grumman’s quality of earnings can give us a better understanding of its performance. A two-year view shows that Northrop Grumman has repurchased its stock, shrinking its share count by 3.6%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

In Q2, Northrop Grumman reported EPS of $7.68, down from $8.15 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Northrop Grumman’s full-year EPS to shrink by 7.7% from $31.47 to $29.05.

Key Takeaways from Northrop Grumman’s Q2 Results

We enjoyed seeing Northrop Grumman beat analysts’ organic revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. Investors were likely hoping for more, and shares traded down 1.3% to $517.00 immediately after reporting.

Is Northrop Grumman an attractive investment opportunity right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).