Northrop Grumman Sees 2027 Growth and $10 Billion in Overseas Sales by 2031

Key Points

• Northrop Grumman expects sales growth of 5% to 7% in 2027, assuming a continuing federal funding resolution is extended into early 2027 to prevent program disruptions.
• The company forecasts international sales will more than double to $10 billion by 2031, from about $4.3 billion reported year to date.
• Growth opportunities include munitions, air and missile defense, the B-21 and Sentinel programs, and national security space. Northrop expects capital spending to rise to about 4.5% of sales in 2027 and 2028 as it expands capacity.

Northrop Grumman NYSE: NOC expects an extended federal funding measure to support its programs without disruption as it pursues faster growth, margin expansion and stronger cash flow in 2027, Chair, CEO and President Kathy Warden said at a Baird conference.

Warden said the defense contractor anticipated that a continuing resolution, currently set to expire Dec. 11, would be extended into early 2027. That assumption was part of the company’s recently issued outlook, she said. Baird Senior Aerospace Defense Analyst Peter Arment referred to the company’s 2027 sales growth outlook of 5% to 7%.

“That extension will provide the resourcing at the level sufficient for our programs to continue without disruption,” Warden said.

Warden described defense demand as unprecedented in recent history and said Northrop had a record backlog. She expressed optimism about bipartisan support for the company’s programs, while acknowledging that the new Congress would debate budget priorities.

Missiles, International Sales and Long-Term Programs

Northrop has positioned itself as a second-source supplier on multiple munitions programs, providing components including solid rocket motors, fuses, warheads and casings, Warden said. The company is adding munitions acceleration contracts to its backlog and investing in counter-drone products, including Raid Hunter.

Warden also cited integrated air and missile defense systems, including IBCS, as a near-term growth opportunity. Those parts of the business are growing at double-digit rates and are expected to contribute revenue growth in 2027, she said.

International sales are expected to more than double to $10 billion in 2031, supported by both near-term products and longer-duration programs, Warden said. Arment said Northrop’s reported year-to-date international sales were about $4.3 billion.

Among the company’s longer-term growth drivers, Warden highlighted the B-21 bomber and Sentinel missile programs. She said the Air Force’s B-21 program of record calls for at least 100 aircraft and that the service is evaluating an increase. Growth and profitability on the program are expected to inflect later this decade as production advances, she said.

Sentinel remains in development, Warden said. Northrop expects to build more than 450 missiles, equip their silos and construct the command-and-control architecture. She said the full program’s life-cycle cost is estimated at more than $140 billion.

Space and Quantum Opportunities

Warden said national security space is poised to grow as space becomes more contested. Much of Northrop’s business in the area now involves higher quantities of satellites rather than a smaller number of large spacecraft, she said, pointing to a recently announced 21-satellite launch for the Space Development Agency’s telecommunications infrastructure.

Northrop also sees potential commercial applications for its microelectronics capabilities. The company has two foundries and a packaging facility, and Warden said customers are showing greater interest in U.S.-built electronics and power-efficient packaging.

On quantum computing, Warden said Northrop initially invested with defense applications in mind but is now focused on commercial opportunities first. A scaled quantum computer must be developed before broader adoption, she said. Northrop has hundreds of patents and hundreds of physicists and engineers working on the technology, according to Warden.

Margins and Capital Spending

Warden identified a greater mix of international sales, production work and potential commercial business as sources of margin improvement, alongside execution and cost efficiency.

Northrop expects capital expenditures of about 4.5% of sales in 2027 and 2028 as it expands capacity. After that, spending is expected to return to a more typical level of around 3% of sales, Warden said.

She said the company’s capital allocation priorities remain investing in the business, paying a competitive dividend and returning excess cash to shareholders. Northrop has increased its dividend for 23 years, she said.

About Northrop Grumman (NYSE:NOC)

Northrop Grumman Corporation is a U.S.-based aerospace and defense company that develops and produces systems for government and commercial customers. Its business spans aeronautics, defense, mission technologies and space, including military aircraft, autonomous systems, missile and air-defense capabilities, sensors, communications and satellites. The company is the prime contractor for the B-21 Raider and is developing the Sentinel intercontinental ballistic missile system. It also supplies technologies and components for other defense programs, as well as launch vehicles, propulsion systems and spacecraft.

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