Executive Summary
Northrop Grumman reported QQ3 2025 revenue of $10.423 billion, up 4.3% year-over-year and 0.7% quarter-over-quarter, with gross margin of 21.37% and operating margin of 11.92%. Net income reached $1.10 billion, delivering $7.69 in diluted EPS, supported by robust operating efficiency and favorable product mix. EBITDA stood at $1.863 billion, while free cash flow per share was $8.78 and operating cash flow per share was $10.88, underscoring the companyโs ability to translate top-line strength into solid cash generation despite a modest leverage profile. The balance sheet remains conservatively positioned, with a debt ratio of 7.3% and a debt-to-capitalization ratio of 18.5%, and liquidity metrics showing a current ratio of 1.11 and a quick ratio near 0.98. The company continues to generate meaningful cash flow from operations, supporting a payout ratio of 30% and a dividend yield of approximately 0.38% in a conservative defense investment context. While backlog detail and segment-level data are not disclosed in the provided dataset, management commentary historically emphasizes sustained demand from DoD programs, program awards, and long-cycle defense programs as ongoing growth drivers. The QQ3 2025 results reaffirm Northrop Grummanโs defensive portfolio positioning, disciplined cost structure, and resilient cash-generating profile in a sector characterized by high barriers to entry and relatively stable end-market demand.
Key Performance Indicators
QoQ: -12.84% | YoY:10.89%
Key Insights
Revenue: $10.423B; YoY +4.27%, QoQ +0.70% | Gross Profit: $2.227B; YoY +5.75%, QoQ +0.77%; Gross Margin: 21.37% | Operating Income: $1.242B; YoY +10.89%, QoQ -12.84%; Operating Margin: 11.92% | Net Income: $1.10B; YoY +7.21%, QoQ -6.30%; Net Margin: 10.55% | EPS Diluted: $7.67; YoY +9.54%, QoQ -5.88% | EBITDA: $1.863B; EBITDARatio: 17.87% | Cash Flow Metrics: Operating Cash Flow per Share $10.88; Free Cash Flow per Share $8.78; Cash per Share $13.68 | Liquidity: Current Ratio 1.11; Quick Ratio 0...
Financial Highlights
Revenue: $10.423B; YoY +4.27%, QoQ +0.70% | Gross Profit: $2.227B; YoY +5.75%, QoQ +0.77%; Gross Margin: 21.37% | Operating Income: $1.242B; YoY +10.89%, QoQ -12.84%; Operating Margin: 11.92% | Net Income: $1.10B; YoY +7.21%, QoQ -6.30%; Net Margin: 10.55% | EPS Diluted: $7.67; YoY +9.54%, QoQ -5.88% | EBITDA: $1.863B; EBITDARatio: 17.87% | Cash Flow Metrics: Operating Cash Flow per Share $10.88; Free Cash Flow per Share $8.78; Cash per Share $13.68 | Liquidity: Current Ratio 1.11; Quick Ratio 0.98; Cash Ratio 0.15 | Leverage and Coverage: Debt Ratio 0.0735; Debt to Capitalization 0.185; Interest Coverage 7.71 | Efficiency: Asset Turnover 0.211; Inventory Turnover 5.07 days; Receivables Turnover 1.16; Payout Ratio 0.30; Dividend Yield 0.38%
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
10.42B |
4.27% |
0.70% |
| Gross Profit |
2.23B |
5.75% |
0.77% |
| Operating Income |
1.24B |
10.89% |
-12.84% |
| Net Income |
1.10B |
7.21% |
-6.30% |
| EPS |
7.69 |
9.54% |
-5.88% |
Key Financial Ratios
operatingProfitMargin
11.9%
operatingCashFlowPerShare
$10.88
freeCashFlowPerShare
$8.78
Management Commentary
Transcript data not provided in the current dataset. Highlights below reflect typical management themes for defense primes, not specific quotes from Northrop Grumman QQ3 2025: - Strategy/Portfolio: Emphasis on sustaining and expanding high-value programs across Aeronautics, Defense, Mission Systems, and Space Systems; focus on mission-critical systems, cyber capabilities, and national security priorities. - Operational Excellence: Cost discipline, productivity improvements, and supply chain resilience to protect margins in a high-rate production environment. - Market Conditions: Stable DoD budget environment with opportunities in missile defense, space domain awareness, and unmanned systems; potential exposure to geopolitical shifts and program timing variability. - Financial Performance: Backlog visibility and revenue mix supporting margin stability; FCF conversion aimed at deleveraging and shareholder returns.
Forward Guidance
No explicit numeric guidance was provided in the supplied QQ3 2025 data. Based on the reported metrics and typical defense budgeting dynamics, near-term revenue growth is likely to be supported by sustained DoD spend, with gross and operating margins expected to remain around current levels given a favorable mix and ongoing efficiency initiatives. Key factors to monitor include: 1) DoD program awards and funding stability; 2) mix-related margin evolution (Space and Missile Defense versus legacy platforms); 3) supply chain and cost inflation containment; 4) free cash flow realization and deployment (dividends, buybacks, or debt reduction). Overall, the investment thesis remains cautiously constructive, contingent on continued defense budget visibility and execution discipline.