Northrop Grumman (NOC) AI Stock Analysis

• Market Cap: $83.94B
• Dividend Yield: 1.49%
• Average Volume (3M): 676.47K
• Price to Earnings (P/E): 21.6
• Beta (1Y): 0.19
• Revenue Growth: -0.65%
• EPS Growth: 77.20%
• Country: US
• Employees: 97,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Aerospace & Defense
• EPS (TTM): 8.15
• Shares Outstanding: 143,182,980
• 10 Day Avg. Volume: 860,306
• 30 Day Avg. Volume: 676,473
• PEG Ratio: 0.15
• Price to Book (P/B): 4.51
• Price to Sales (P/S): 1.68
• P/FCF Ratio: 26.32
• Enterprise Value/Market Cap: 1.04
• Enterprise Value/Revenue: 2.16
• Enterprise Value/Gross Profit: 11.19
• Enterprise Value/Ebitda: 12.84
• 1Y Price Target: $617.71
• Price Target Upside: 5.45% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16

• Rating: 77 Outperform
• Price Target: $668.00 ▲(14.04% Upside)

Northrop Grumman's strong earnings call performance and positive technical indicators are the most significant factors driving the score. While financial performance is solid, concerns about cash flow and valuation slightly temper the overall outlook. The company's strategic initiatives and increased guidance provide a positive long-term view.

Positive Factors

Revenue Growth

The 9% revenue growth indicates strong demand across all segments, supporting long-term business expansion and market competitiveness.

International Expansion

Robust international sales growth highlights successful market penetration and diversification, enhancing revenue stability and growth prospects.

Defense Investments

Increased defense investments bolster Northrop Grumman's strategic positioning and long-term contract opportunities, ensuring sustained revenue streams.

Negative Factors

Decline in Free Cash Flow

A significant drop in free cash flow could constrain financial flexibility, impacting the ability to invest in growth initiatives and return capital to shareholders.

Space Segment Decline

The decline in the Space segment sales may signal challenges in maintaining growth momentum in this strategic area, impacting future revenue potential.

Rising Debt Levels

Increased debt levels could elevate financial risk and limit the company's ability to maneuver in changing market conditions, affecting long-term stability.

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 make up a significant portion of its earnings. The company is a major contractor for the U.S. Department of Defense, providing high-tech systems and services that are essential for military operations. Key revenue streams include the development and production of military aircraft, unmanned systems, missile systems, and cybersecurity solutions. Additionally, Northrop Grumman engages in various partnerships and collaborations with other defense contractors and technology firms, which further enhance its capabilities and market reach. The company's revenue is bolstered by long-term contracts and sustainment services, which provide reliable income over extended periods. Furthermore, Northrop Grumman's involvement in space exploration, including contracts with NASA and other commercial partnerships, contributes to its financial performance as the demand for space-based technologies and services continues to grow.

Northrop Grumman Financial Statement Overview

Summary

Northrop Grumman demonstrates strong profitability with healthy margins and efficient asset management typical for the industry. However, the recent decline in revenue growth and a significant drop in free cash flow generation are concerns. The balance sheet shows moderate leverage, indicating some exposure to interest rate increases.

Income Statement

The TTM (Trailing-Twelve-Months) gross profit margin is approximately 19.33%, indicating a solid level of efficiency in managing production costs relative to revenue. The net profit margin stands at 9.74%, reflecting healthy profitability, although it has slightly decreased from the previous year. Revenue growth is slightly negative at -1.29% compared to the previous year, suggesting a minor contraction. The EBIT margin is 9.82%, while the EBITDA margin is 16.86%, both demonstrating stable operational profitability.

Balance Sheet

The debt-to-equity ratio is 1.13, showing a moderate level of leverage, which is typical for the industry but suggests potential exposure to interest rate increases. The return on equity (ROE) is robust at 25.50%, highlighting strong profitability for shareholders. The equity ratio is 31.28%, indicating a balanced capital structure and a solid asset management strategy.

Cash Flow

The free cash flow has declined by 50.10% compared to the previous year, pointing to challenges in cash generation. The operating cash flow to net income ratio is 0.75, which is lower than desired, suggesting that earnings are not fully translating to cash flow. The free cash flow to net income ratio is 0.33, indicating limited cash flow relative to reported profits.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	40.50B	41.03B	39.29B	36.60B	35.67B	36.80B
Gross Profit	7.83B	8.36B	6.55B	7.47B	7.27B	7.48B
EBITDA	6.83B	6.84B	4.23B	7.68B	8.73B	5.59B
Net Income	3.94B	4.17B	2.06B	4.90B	7.00B	3.19B
Balance Sheet
Total Assets	49.45B	49.36B	46.54B	43.76B	42.58B	44.47B
Cash, Cash Equivalents and Short-Term Investments	1.90B	4.35B	3.11B	2.58B	3.53B	4.91B
Total Debt	17.52B	18.40B	16.05B	15.00B	14.66B	16.61B
Total Liabilities	33.98B	34.07B	31.75B	28.44B	29.65B	33.89B
Stockholders Equity	15.47B	15.29B	14.79B	15.31B	12.93B	10.58B
Cash Flow
Free Cash Flow	1.31B	2.62B	2.10B	1.47B	2.15B	2.88B
Operating Cash Flow	2.97B	4.39B	3.88B	2.90B	3.57B	4.30B
Investing Cash Flow	-1.35B	-1.75B	-1.58B	-1.24B	2.06B	-1.21B
Financing Cash Flow	-3.00B	-1.40B	-1.76B	-2.61B	-7.00B	-432.00M

Northrop Grumman Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 585.77
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 585.77 is above the 20-day moving average (MA) of 579.98, above the 50-day MA of 576.12, and above the 200-day MA of 504.62, indicating a bullish trend. The MACD of 1.63 indicates Positive momentum. The RSI at 58.22 is Neutral, neither overbought nor oversold. The STOCH value of 70.40 is Neutral, 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
GD	79 Outperform	87.05B	21.73	17.33%	1.80%	11.85%	16.12%
NOC	77 Outperform	$83.94B	21.56	26.50%	1.49%	-0.65%	77.20%
RTX	76 Outperform	216.01B	35.46	9.85%	1.63%	15.44%	164.00%
LHX	75 Outperform	53.13B	31.71	8.80%	1.65%	2.93%	43.29%
LMT	71 Outperform	113.52B	27.38	78.82%	2.73%	1.09%	-35.50%
BA	45 Neutral	162.65B	-12.92	324.22%	―	2.41%	-193.57%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Northrop Grumman Corporate Events

Northrop Grumman Secures $3 Billion Credit Facility

On September 2, 2025, Northrop Grumman Corporation entered into a new credit agreement to secure a five-year senior unsecured revolving credit facility worth $3 billion, replacing a previous $2.5 billion facility from August 2022. This facility is intended to support the company’s commercial paper program and general corporate purposes, with terms including covenants on asset sales and debt ratios, highlighting the company’s strategic financial management and stability in maintaining operational flexibility.