Northrop’s Long-Term Outlook Remains Intact Amid Solid Orders and Growing Backlog

Wide-moat-rated Northrop Grumman posted mixed third-quarter results, as diluted EPS of $5.89 missed FactSet consensus by 4% but orders and backlog remained resilient. Management anticipates full-year 2022 results near the lower end of guidance as the company grapples with persistent supply chain constraints. Full-year 2023 guidance, while still positive, was also subdued by slower expected growth in aeronautics and defense. We see no reason to alter our long-term outlook. The company earned $8.7 billion in contract awards and increased backlog year over year to nearly $80 billion, which we expect will percolate through to financial performance over time. We maintain our $368 per share fair value estimate as our moderated near-term forecast offsets the time value of money.