Northrop Grumman Corporation

The 2025 numbers show steady top-line growth and cash generation that ran ahead of net income, but the margin for error on large fixed-price and cost-estimate-dependent programs remains the central question. Operating cash flow was $4.76 billion against net income of $4.18 billion, a ratio of 1.14, up from $4.39 billion of operating cash flow in 2024. Total assets reached $51.38 billion, liabilities $34.7 billion and equity $16.67 billion, while long-term debt rose to $15.16 billion from $14.69 billion. The Beneish M-Score is -2.459, which is below -1.78 and therefore not in the elevated manipulation-risk zone. This is a screening tool that looks at patterns in reported figures; a result outside the elevated zone does not certify the accounts or resolve the estimate judgments the filing describes on B-21. The Altman Z″-Score of 2.33 falls in the grey zone between 1.10 and 2.60, a range that calls for context rather than a firm reading of financial distress. The Piotroski F-Score is 7 of 8 computable signals, a high count on that checklist of year-over-year profitability, leverage and efficiency measures, though it does not forecast future results. Readers may want to look at the Item 1A passage describing the 2025 sales mix by contract type, which the excerpt cuts off before completing. Readers may also want to track future 10-Q updates on B-21 cost-to-complete estimates, the OBBBA funds that remain available for obligation until September 30, 2029 and can be expended through FY 2034, and any executive-order contract terms that could limit capital returns.

Catalyst.Revenue rose 2.2% to $41.95 billion in 2025 from $41.03 billion in 2024, and operating income reached $4.51 billion versus $4.37 billion. Management attributes demand to the global security environment, citing the conflicts in Ukraine and Iran and threats in the Middle East and Western Pacific. The July 4, 2025 OBBBA allocates approximately $150 billion in mandatory defense funding for air and missile defense, munitions, strategic deterrence and shipbuilding, and the February 3, 2026 appropriations legislation includes approximately $859 billion for defense. The May 24, 2025 sale of the IMS training services business for $333 million in cash adds a one-time element to year-over-year comparisons, because 2025 includes that unit's results before the divestiture date.

Hidden risk.The filings show concentration and contract-estimate exposure. The U.S. government supplied 84 percent of 2025 sales, and the risk factors state it can delay, modify or cancel programs, issue stop work orders, or terminate contracts for convenience. The risk factors also warn that certain executive-order-related contract terms could prohibit share repurchases or dividends for a period of time. On the B-21 program, the company recognized a projected $1.56 billion loss across the LRIP options in Q4 2023 and an additional $477 million loss in Q1 2025. In Q1 2026, a $157 million net unfavorable EAC adjustment on the first four LRIP lots was offset by a reduction in the loss contingency accrual on the remainder of the program.