Northrop Grumman Earnings: B-21 Program Charge Clouds Positive Long-Term Outlook

Morningstar’s Metrics for Northrop Grumman

• Fair Value Estimate: $620.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium

What We Thought of Northrop Grumman’s Earnings

Northrop Grumman’s NOC first-quarter sales declined 7% year over year to $9.5 billion, led by slower work on the B-21 bomber and winding down a few space programs. The company also booked future costs of $477 million in the B-21 program as it adapted production to tool up for future rate increases.

Why it matters: While disappointing for the quarter, management explained that the B-21 charges resulted mostly from a reorganization of how it will manufacture the Air Force’s new bomber, allowing a faster ramp-up to higher rates of production in 2026-28.

• We think the move is more than likely to pay off for Northrop and the Air Force, whether it means the military can take delivery of its intended fleet of 100 bombers sooner than originally anticipated or potentially add to the size of the fleet.

Coming up: CEO Kathy Warden mentioned anticipating more contract awards from the US Department of Defense in the coming months, which should include the Navy’s choice between Northrop and Boeing BA to build its next generation F/A-XX jet. We slightly favor Northrop in that contest.

The bottom line: We have incorporated the results into our estimates and slightly increased our medium-term forecast for aeronautics revenue. As a result, we’ve raised our fair value estimate to $620 per share from $600.

• Investors disappointed by the company’s lower 2025 guidance traded the shares down 13% on April 22 after the earnings release, putting the stock within reach of its 5-star price below $434.