Northrop Grumman (NOC 0.99%) delivered first-quarter earnings that easily surpassed expectations, sending the stock up more than 4% and easing some investor fears about the outlook for defense spending.

On Thursday before the market opened, Northrop reported adjusted first-quarter earnings of $6.57 per share on revenue of $9.2 billion, outpacing consensus expectations for $5.48 per share in earnings on $8.5 billion in sales. The company also boosted full-year revenue guidance by $200 million to a range of $35.3 billion to $35.7 billion, and hiked full-year earnings guidance to $24 to $24.50 per share.

Rendering of the Northrop Grumman-designed B21 bomber.

A rendering of Northrop Grumman's B-21 Raider stealth bomber. Image source: Northrop Grumman.

The company's space business helped fuel the beat, generating total revenue that was up 29% year over year on margins that came in at 10.9%, or about 100 basis points ahead of expectations.

"Our team booked competitive new awards and generated higher sales, earnings and cash," CEO Kathy Warden said in a statement. "These strong operational results, coupled with portfolio shaping, enabled value-creating capital deployment for our shareholders. Based on our strong first-quarter results and solid outlook for the year, we are raising 2021 sales and EPS guidance."

Shares of Northrop and other defense contractors have underperformed over the past year on investor concerns that a new U.S. president, coupled with increased pandemic-related spending, would lead to a cut in Pentagon funding. Even with Thursday's gains, Northrop Grumman shares are up just 2% in the last year, underperforming the S&P 500 by more than 40 percentage points.

Northrop showed no signs of a slowdown in the quarter. The company booked as much new business as it billed, led by space's impressive book-to-bill ratio of 1.7, and ended the quarter with a backlog of $79.3 billion in future business.