S&P Global Ratings upgraded Northrop Grumman Corp’s outlook from stable to positive on 29‑May‑2026, while affirming its BBB+ long‑term issuer rating and A‑2 short‑term rating.
The positive outlook is based on expectations that leverage will stay below 2.5× and funds‑from‑operations to debt will remain in the mid‑30% range (35‑40%) over the next 12‑24 months, despite higher capital spending.
S&P projects debt‑to‑EBITDA under 2.5× and FFO‑to‑debt between 35%‑40% for the next two years, indicating improving credit ratios.
Elevated global security risks and active conflicts are expected to boost defense budgets; the White House 2027 budget proposes nearly $1.5 trillion for defense, a 44% rise over 2026.
Northrop’s space, missile, missile‑defense, advanced computing and secure communications programs align with U.S. strategic priorities.
The company has an agreement with the Air Force to accelerate B‑21 bomber production and will invest an additional $2.5 billion to expand manufacturing capacity mainly in 2027‑28, with further government supply‑chain investment.
Following a Jan‑2026 executive order limiting defense‑sector buybacks, Northrop is expected to suspend share repurchases for the remainder of 2026 while continuing dividend payments.
