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Northrop Grumman (NOC)
NYSE:NOC
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Northrop Grumman
(NYSE:NOC)
Select Model
Select Model
Rating:77Outperform
Price Target:
$770.00
▲(6.15% Upside)
Action:ReiteratedDate:02/14/26
The score is driven primarily by strong financial performance led by improving free cash flow and steady revenue/profitability, supported by bullish technical trends (price above key moving averages and positive MACD). Valuation is a constraint (P/E ~23 with a modest dividend yield), while the latest earnings call was broadly constructive with record backlog and favorable 2026 outlook but acknowledged program-timing and near-term margin-pressure risks.
Positive Factors
Free Cash Flow Strength
Sustained, multi-year free cash flow growth provides durable financial flexibility to fund capital investments, pension obligations, and prioritized shareholder returns. Consistent strong FCF underpins the firm's ability to invest in capacity and absorb multi-year program cash needs without relying on external financing.
Record Backlog & Revenue Visibility
A record backlog with above‑par book-to-bill provides multi-year revenue visibility tied to government and FMS contracts. This structural backlog reduces top-line volatility, supports production planning and capacity investments, and underwrites medium-term revenue and cashflow forecasts.
Diversified Growth & Capacity Investments
Broad-based segment momentum—strong international growth plus deliberate munitions and space capacity expansion—diversifies revenue sources and reduces single-program risk. Investments in industrial capacity and new program awards support sustainable market share and long-term secular demand exposure.
Negative Factors
Margin Volatility
Historical margin swings and incomplete recent margin data create uncertainty about sustainable profitability. Continued development-heavy mix in Aeronautics and program-level variability can depress near-to-medium term margins, making long-term margin assumptions and operational leverage harder to rely on.
B-21 Investment & Timing Risk
Potential acceleration of B-21 production demands large, multi-year capital commitments and delays economic payback until later years. That structural funding requirement can constrain free cash available for other priorities and introduces execution and timing risk tied to program ramp and government decisions.
Balance Sheet Data Uncertainty
Inconsistencies in reported 2025 debt levels weaken confidence in the leverage profile and ability to assess long‑term financial flexibility. Unclear leverage metrics can mask refinancing needs or covenant risk, complicating durable assessments of capital structure resilience.
Northrop Grumman (NOC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$102.87B
Dividend Yield1.55%
Average Volume (3M)920.19K
Price to Earnings (P/E)24.9
Beta (1Y)0.19
Revenue Growth-0.14%
EPS Growth72.35%
CountryUS
Employees97,000
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)7.23
Shares Outstanding141,921,620
10 Day Avg. Volume764,105
30 Day Avg. Volume920,187
Financial Highlights & Ratios
PEG Ratio7.41
Price to Book (P/B)4.91
Price to Sales (P/S)1.95
P/FCF Ratio24.74
Enterprise Value/Market Cap1.15
Enterprise Value/Revenue2.83
Enterprise Value/Gross Profit14.27
Enterprise Value/Ebitda16.46
Forecast
1Y Price Target
$733.75Price Target Upside1.15% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering16
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Northrop Grumman Business Overview & Revenue Model
Company DescriptionNorthrop Grumman Corporation operates as an aerospace and defense company worldwide. The company's Aeronautics Systems segment designs, develops, manufactures, integrates, and sustains aircraft systems. This segment also offers unmanned autonomous aircraft systems, including high-altitude long-endurance strategic ISR systems and vertical take-off and landing tactical ISR systems; and strategic long-range strike aircraft, tactical fighter and air dominance aircraft, and airborne battle management and command and control systems. Its Defense Systems segment designs, develops, and produces weapons and mission systems. It offers products and services, such as integrated battle management systems, weapons systems and aircraft, and mission systems. This segment also provides command and control and weapons systems, including munitions and missiles; precision strike weapons; propulsion, such as air-breathing and hypersonic systems; gun systems and precision munitions; life cycle service and support for software, weapons systems, and aircraft; and logistics support, sustainment, operation, and modernization for air, sea, and ground systems. The company's Mission Systems segment offers cyber, command, control, communications and computers, intelligence, surveillance, and reconnaissance systems; radar, electro-optical/infrared and acoustic sensors; electronic warfare systems; advanced communications and network systems; cyber solutions; intelligence processing systems; navigation; and maritime power, propulsion, and payload launch systems. This segment also provides airborne multifunction sensors; maritime/land systems and sensors; navigation, targeting, and survivability solutions; and networked information solutions. Its Space Systems segment offers satellites and payloads; ground systems; missile defense systems and interceptors; launch vehicles and related propulsion systems; and strategic missiles. The company was founded in 1939 and is based in Falls Church, Virginia.
How the Company Makes MoneyNorthrop Grumman generates revenue primarily through government contracts, which account for a significant portion of its earnings. The company's revenue model is based on the provision of products, systems, and services that are often long-term contracts with various U.S. government agencies and allied foreign governments. Key revenue streams include defense and aerospace systems, cybersecurity solutions, and space-related services. Major programs contributing to the company's revenues include the F-35 Lightning II fighter jet, the B-21 Raider bomber, missile defense systems, and various unmanned aerial vehicles (UAVs). Additionally, Northrop Grumman has established significant partnerships with other defense contractors, suppliers, and governmental agencies, which enhance its market position and contribute to its earnings. Factors such as increasing defense budgets, global security dynamics, and the demand for advanced technological solutions further support the company's revenue growth.
Northrop Grumman Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down sales across various divisions, showcasing which areas are growing and contributing most to the company's top line, indicating strategic strengths or weaknesses.
Breaks down sales across various divisions, showcasing which areas are growing and contributing most to the company's top line, indicating strategic strengths or weaknesses.
Data provided by:
The Fly
The FlyNorthrop Grumman Earnings Call Summary
Earnings Call Date:Jan 27, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Positive
The call emphasized multiple material positives: record backlog (~$95–$96B), strong Q4 and full-year performance with sales and EPS beating guidance, robust free cash flow growth (+26%), significant international momentum (+20%), and concrete investments to expand munitions and space capacity. Management provided prudent 2026 guidance that conservatively excludes potential upside from B-21 acceleration and other opportunities, noted timing risks for certain programs (Sentinel, Gen 63 cadence) and expects near-term margin pressure in Aeronautics due to development mix. On balance, the positive operational and financial momentum, healthy cash generation, and clear capacity investments outweigh the timing/conservatism risks, supporting an overall favorable outlook.Q4-2025 Updates
Positive Updates
Record Backlog and Strong Awards
Backlog reached a new company record (noted as over $95 billion and later $96 billion) driven by roughly $46 billion in net awards in 2025 and nearly $20 billion backlog growth since 2021; five-year average book-to-bill of 1.1x.
Revenue Growth and Q4 Strength
Fourth quarter sales were $11.7 billion, up 10% year-over-year and accelerating 12% sequentially; Q4 represented 28% of full year sales. Full-year 2025 sales were ~$42 billion, up ~3% organically and above the high end of guidance.
Earnings and Cash Flow Outperformance
Q4 mark-to-market adjusted EPS of $7.23 was up 13% year-over-year; full-year free cash flow was $3.3 billion, up 26% vs. 2024 and the third consecutive year of ≥25% free cash flow growth.
Segment Momentum — Aeronautics & Mission Systems
Aeronautics Systems was the fastest growing segment in Q4 with sales of $3.9 billion, up 18% YoY. Mission Systems delivered double-digit growth in Q4 and is projected to reach high-$12 billion sales in 2026 with margins moving into the high-14% range.
Space Business Recovery and Key Awards
Space returned to growth in Q4 (+5% YoY) driven by Gen 63 motors (Amazon Project LEO) and restricted programs; secured 18 Tranche 3 SDA satellites (raising SDA satellite backlog to 150) and won Gen 63 awards that support multi-year deliveries.
Defense Systems & Munitions Capacity Expansion
Defense Systems showed broad growth (Q4 up 7% GAAP, 12% organically) and the company has materially increased munitions capacity — tactical SRM capacity doubled since 2021 with plans to increase another 50% at ABL by early 2027 and triple Elkton capacity by 2030.
International Growth
International sales grew 20% in 2025; company reports formal requests from 20+ countries for IDCS and expects multiple international contract opportunities (Americas, Middle East, Asia Pacific) supporting continued international expansion.
Prudent Capital & Pension Position
Pension asset returns of 11.3% improved funding status to 106%; minimal pension cash contributions expected. Capital plan increases 2026 CapEx to $1.65 billion (~4% of sales) to support capacity, while guidance targets $3.1–$3.5 billion free cash flow.
Negative Updates
Conservative 2026 Guidance Excludes Potential Upside
2026 guidance ($43.5–$44.0 billion sales, mid single-digit growth) does not include potential B-21 production-rate acceleration or some other upside opportunities (e.g., Apex/FAXX), creating conservatism tied to timing risk of backlog conversion.
B-21 Acceleration Requires Significant Multi-Year Investment
Any B-21 production acceleration would require an expected $2–$3 billion of investment over multiple years and the financial/volume impact is expected to be largely realized in 2027–2029 rather than materially in 2026.
Sentinel Program Timing Uncertainty
Sentinel remains in development for several years with production expected later in the decade; IOC timeline has been pushed out (questions mentioned IOC ~2033), so near-term revenue contribution is limited and timing remains uncertain.
Aeronautics Margin Pressure from Development Mix
Aeronautics Systems 2026 margin guidance is low-to-mid single-digit growth with operating margin projected in the low-to-mid 9% range, pressured by higher mix of development programs (e.g., B-21, Takimo) versus mature production.
Program-Level Variability & EAC Adjustments
Defense Systems operating income was modestly down in the quarter principally due to lower favorable net EAC adjustments; some segment-level variability (e.g., Gen 63 volumes expected flat in 2026 due to capacity expansion timing).
Capital Allocation Choice Reduces Share Buyback Activity
Management intends to keep share count relatively flat and will not execute additional buybacks beyond the end of January, prioritizing increased CapEx and industrial base investments — a potential investor-return tradeoff in the near term.
Near-Term Program & Working Days Seasonality
Q1 2026 sales expected to be up low single digits partially due to fewer working days (61) and some Q4 2025 material timing/delivery that will not repeat; this creates front-loaded seasonality and a slower start to 2026.
Company Guidance
Northrop Grumman’s 2026 guidance (consistent with October and excluding any accelerated B‑21 production) calls for sales of $43.5–$44.0 billion (mid‑single‑digit growth) with Q1 up low single digits and growth accelerating through the year; segment operating income of $4.85–$5.0 billion (low‑ to‑mid‑11% segment operating margin); mark‑to‑market adjusted EPS of $27.40–$27.90 (up mid‑single digits) assuming an effective tax rate in the low‑ to‑mid‑17% range, $620 million of interest expense, and ~$280 million of other unallocated corporate expenses with a roughly flat share count. Free cash flow is expected at $3.1–$3.5 billion while capital expenditures rise to $1.65 billion (~4% of sales); segment-level guidance: Aeronautics Systems mid‑$13 billion in sales with low‑to‑mid‑9% margins, Defense Systems mid‑to‑high $8 billion with ~10% margins, Mission Systems high $12 billion with margins in the high‑14% range, and Space ≈$11 billion with ~11% operating margin; intersegment eliminations ~$2.4 billion (high‑13% OM). Management reiterated disciplined capital deployment—paying down a $527 million maturing note in March, limiting buybacks after January, dividend decision by the board in May—and noted pension/funding metrics: 2025 asset returns 11.3%, funding status 106%, and forecast cash recoveries of $245 million.Northrop Grumman Financial Statement Overview
Summary
Strong and improving cash generation (rising operating cash flow and meaningful free-cash-flow expansion through 2025) supports flexibility and shareholder returns. Revenue growth is steady and profitability is solid in 2024–2025, but margin volatility (notably weaker 2023) plus 2025 data gaps/inconsistencies (incomplete margin fields and a sharp reported debt drop) reduce confidence in the latest trend signals.Income Statement
Revenue shows steady expansion over the period (2020–2025), with growth accelerating in 2025. Profitability is solid for the industry with net margins around ~10% in 2024–2025 and stronger operating profit in 2024–2025 versus 2023. Key weakness: margins have been volatile (notably weaker profitability in 2023 vs. 2021–2022), and 2025 gross/operating margin fields appear incomplete in the provided data, limiting margin trend confidence for the most recent year.78
Positive
Balance Sheet
The balance sheet is generally supportive, with equity increasing over time and assets growing. Leverage looks manageable in 2022–2024 (debt roughly in line with equity), though it was higher in 2020–2021. A notable data inconsistency appears in 2025 where reported debt drops sharply versus prior years, which—if accurate—would be a meaningful improvement, but it reduces certainty around the latest leverage profile based on the provided figures.74
Positive
Cash Flow
Cash generation is strong and improving: operating cash flow rises from 2022 through 2025, and free cash flow expands meaningfully, including a very large step-up in 2025. Free cash flow is consistently positive and covers a substantial portion of net income (roughly ~50% to ~70% over 2020–2025), supporting capital returns and flexibility. Main weakness: cash conversion is not consistently high versus earnings (free cash flow remains below net income each year), indicating working-capital or capital spending demands can temper reported profit translation into cash.81
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 41.95B | 41.03B | 39.29B | 36.60B | 35.67B |
| Gross Profit | 8.31B | 8.36B | 6.55B | 7.47B | 7.27B |
| EBITDA | 7.21B | 6.84B | 4.23B | 7.68B | 8.73B |
| Net Income | 4.18B | 4.17B | 2.06B | 4.90B | 7.00B |
Balance Sheet | |||||
| Total Assets | 51.38B | 49.36B | 46.54B | 43.76B | 42.58B |
| Cash, Cash Equivalents and Short-Term Investments | 4.40B | 4.35B | 3.11B | 2.58B | 3.53B |
| Total Debt | 19.74B | 18.40B | 16.05B | 15.00B | 14.66B |
| Total Liabilities | 34.70B | 34.07B | 31.75B | 28.44B | 29.65B |
| Stockholders Equity | 16.67B | 15.29B | 14.79B | 15.31B | 12.93B |
Cash Flow | |||||
| Free Cash Flow | 3.31B | 2.62B | 2.10B | 1.47B | 2.15B |
| Operating Cash Flow | 4.76B | 4.39B | 3.88B | 2.90B | 3.57B |
| Investing Cash Flow | -1.16B | -1.75B | -1.58B | -1.24B | 2.06B |
| Financing Cash Flow | -3.55B | -1.40B | -1.76B | -2.61B | -7.00B |
Northrop Grumman Technical Analysis
Positive
725.39
Price Trends
638.61
Positive
609.20
Positive
569.84
Positive
Market Momentum
22.56
Negative
65.49
Neutral
73.87
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NOC, the sentiment is Positive. The current price of 725.39 is above the 20-day moving average (MA) of 696.54, above the 50-day MA of 638.61, and above the 200-day MA of 569.84, indicating a bullish trend. The MACD of 22.56 indicates Negative momentum. The RSI at 65.49 is Neutral, neither overbought nor oversold. The STOCH value of 73.87 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NOC.
Northrop Grumman Risk Analysis
Northrop Grumman disclosed 21 risk factors in its most recent earnings report. Northrop Grumman reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Northrop Grumman Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $102.87B | 24.92 | 26.17% | 1.55% | -0.14% | 72.35% | |
75 Outperform | $65.77B | 41.31 | 8.20% | 1.61% | 2.83% | 47.00% | |
75 Outperform | $274.91B | 41.27 | 10.74% | 1.44% | 8.79% | 39.63% | |
74 Outperform | $94.50B | 22.62 | 17.66% | 1.73% | 11.86% | 17.39% | |
74 Outperform | $149.51B | 30.24 | 76.87% | 2.77% | 2.88% | -35.15% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
56 Neutral | $187.64B | 123.27 | 289.00% | ― | 10.19% | -6.03% |
* Industrials Sector Average
NOC
Northrop Grumman
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273.70
60.59%
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Northrop Grumman Corporate Events
Business Operations and StrategyExecutive/Board Changes
Northrop Grumman refreshes board and executive incentive plans
Positive
Feb 13, 2026
On Feb. 12 and 13, 2026, Northrop Grumman expanded its board and refreshed its leadership structure, electing Admiral Christopher W. Grady, former vice chairman of the Joint Chiefs of Staff, as a director and appointing him to its Audit and Risk and Policy committees, while designating James S. Turley as lead independent director effective May 20, 2026, after the planned retirement of Madeleine A. Kleiner. The board also approved 2026 incentive plans and long-term equity awards for top executives, tying pay to cash flow, segment operating income, sales, quality, customer satisfaction, on-time delivery, production scaling, belonging and sustainability, as well as multi‑year metrics such as free cash flow, ROIC and relative TSR, underscoring a continued emphasis on financial discipline, strategic execution and stakeholder value.
The most recent analyst rating on (NOC) stock is a Buy with a $785.00 price target. To see the full list of analyst forecasts on Northrop Grumman stock, see the NOC Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.