Northrop Grumman (NOC) AI Stock Analysis

• Market Cap: $96.87B
• Dividend Yield: 1.55%
• Average Volume (3M): 878.23K
• Price to Earnings (P/E): 23.3
• Beta (1Y): 0.18
• Revenue Growth: -0.14%
• EPS Growth: 72.35%
• Country: US
• Employees: 97,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Aerospace & Defense
• EPS (TTM): 7.23
• Shares Outstanding: 141,921,620
• 10 Day Avg. Volume: 901,507
• 30 Day Avg. Volume: 878,229
• PEG Ratio: 7.41
• Price to Book (P/B): 4.91
• Price to Sales (P/S): 1.95
• P/FCF Ratio: 24.74
• Enterprise Value/Market Cap: 0.99
• Enterprise Value/Revenue: 2.29
• Enterprise Value/Gross Profit: 11.56
• Enterprise Value/Ebitda: 13.34
• 1Y Price Target: $731.07
• Price Target Upside: 6.09% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 14
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: $764.00 ▲(10.86% Upside)

The score is driven primarily by solid financial performance (steady growth and improving free cash flow) and a constructive earnings outlook supported by record backlog and disciplined 2026 guidance. Technicals are bullish but appear overextended (RSI/Stoch elevated), and valuation is somewhat demanding with a modest dividend yield.

Positive Factors

Record Backlog

A record backlog (~$95–$96B) provides multi-year revenue visibility from long-term government contracts, supporting mid-single-digit organic growth guidance. This durable backlog underpins production planning, capacity investment decisions, and reduces demand cyclicality across the planning horizon.

Improving Free Cash Flow

Consistent and rising free cash flow (three consecutive years of ≥25% growth and $3.3B in 2025) strengthens financial flexibility. Sustainable FCF supports capital expenditures, pension funding, debt paydown and targeted investments (munitions/space capacity), enabling disciplined long-term capital allocation.

Diversified Defense & Space Franchise

Broad exposure across aerospace, mission, defense and space lowers single-program reliance and leverages high barriers to entry (complex systems, long procurement cycles). This structural diversification and technology breadth support stable government contracting revenue and international expansion over the medium term.

Negative Factors

Aeronautics Margin Pressure

A higher mix of development programs (B‑21, Takimo) is expected to compress Aeronautics margins in 2026. Development-phase work typically carries lower near-term margins and multi-year ramp economics, creating persistent segment margin headwinds until production scales and fixed costs are absorbed.

Large Upfront B-21 Investment

Accelerating B‑21 production requires substantial multi-year capital (estimated $2–$3B) and working capital, with most financial benefits realized in 2027–2029. This durable spending commitment can limit near-term allocation to buybacks or other investments and raises execution and funding timing risk.

Program Timing Uncertainty (Sentinel)

Long development timelines and deferred IOC for Sentinel mean expected revenue and cash flows are pushed well into the next decade. Such program timing uncertainty raises backlog conversion risk and complicates near-to-medium term capacity and cash planning, increasing execution risk over multiple years.

Northrop Grumman Business Overview & Revenue Model

Company Description

Northrop 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 Money

Northrop 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 Financial Statement Overview

Summary

Solid fundamentals supported by steady revenue expansion, resilient net margins around ~10% in 2024–2025, and strengthening cash generation. Free cash flow is consistently positive and stepped up meaningfully in 2025, though cash conversion remains below net income and 2025 has data gaps/inconsistencies (margin fields and a sharp reported debt drop) that reduce confidence in the latest-year trend.

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.

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.

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.

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

• Technical Analysis Sentiment: Positive
• Last Price: 689.13
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 689.13 is above the 20-day moving average (MA) of 633.11, above the 50-day MA of 591.53, and above the 200-day MA of 553.86, indicating a bullish trend. The MACD of 26.79 indicates Negative momentum. The RSI at 72.27 is Negative, neither overbought nor oversold. The STOCH value of 87.18 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NOC.

Northrop Grumman Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NOC	75 Outperform	$96.87B	23.34	26.17%	1.55%	-0.14%	72.35%
RTX	75 Outperform	$269.87B	40.58	10.74%	1.44%	8.79%	39.63%
GD	74 Outperform	$99.03B	23.73	17.66%	1.73%	11.86%	17.39%
LHX	74 Outperform	$67.44B	38.71	9.13%	1.61%	2.83%	47.00%
LMT	71 Outperform	$137.67B	33.21	62.78%	2.77%	2.88%	-35.15%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
BA	56 Neutral	$191.51B	127.34	289.13%	―	10.19%	-6.03%

Northrop Grumman Corporate Events

Northrop Grumman Appoints New CFO John Greene

On November 6, 2025, Northrop Grumman Corporation announced the election of John Greene as the new corporate vice president and chief financial officer, effective January 7, 2026. Greene, who has a distinguished record in finance leadership across various industries, will succeed Kenneth Crews, who will step down but remain in an advisory role until February 20, 2026. The company reaffirmed its 2025 financial guidance and 2026 outlook, emphasizing the strategic importance of this leadership transition in navigating a dynamic market with significant growth opportunities.

The most recent analyst rating on (NOC) stock is a Buy with a $658.00 price target. To see the full list of analyst forecasts on Northrop Grumman stock, see the NOC Stock Forecast page.