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Northrop Grumman (NOC)
NYSE:NOC
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Northrop Grumman (NOC) AI Stock Analysis

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NOC

Northrop Grumman

(NYSE:NOC)

Rating:77Outperform
Price Target:
$668.00
▲(15.22% 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
Earnings Performance
Northrop Grumman reported stellar 2Q25 results, driven largely by profitability gains across all segments.
International Sales
International sales drove growth in 2Q, up 18% and continuing to benefit from foreign defense spending and increased availability of program exports.
Program Development
Marquee programs including B-21 and Sentinel continue to develop favorably, while NOC remains confident it can compete on emerging opportunities including space, unmanned systems, and international demand.
Negative Factors
Program Loss
Softer Space Systems 2025 outlook is due to Northrop Grumman's loss on the Evolved Strategic Satellite Communications program to Boeing.

Northrop Grumman (NOC) vs. SPDR S&P 500 ETF (SPY)

Northrop Grumman Business Overview & Revenue Model

Company DescriptionNorthrop Grumman Corporation (NOC) is a global aerospace and defense technology company headquartered in Falls Church, Virginia. The company operates in four primary sectors: Aerospace Systems, Defense Systems, Mission Systems, and Space Systems. Northrop Grumman is known for its advanced technologies and systems, including unmanned systems, cyber solutions, C4ISR (command, control, communications, computers, intelligence, surveillance, and reconnaissance) systems, and missile defense systems. The company serves a diverse range of clients, including the U.S. Department of Defense, international governments, and commercial customers, providing critical solutions for national security and space exploration.
How the Company Makes MoneyNorthrop 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 Key Performance Indicators (KPIs)

Any
Any
Revenue by Segment
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.
Chart InsightsNorthrop Grumman's Space Systems revenue, after years of growth, has sharply declined since late 2023, likely due to the B-21 program's cost issues and contracting delays. Meanwhile, Defense Systems revenue surged in late 2024, possibly benefiting from new contracts like the IBCS award. Despite a 7% drop in Q1 2025 sales, the company maintains confidence in achieving its full-year sales target, driven by strong international sales and a record backlog. Investors should watch for resolution of B-21 challenges and the impact of international growth on overall performance.
Data provided by:Main Street Data

Northrop Grumman Earnings Call Summary

Earnings Call Date:Jul 17, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance and growth, particularly in international sales and defense programs like B-21 and Sentinel. Despite some challenges, such as the impact of tax reform and declines in the Space segment, the overall sentiment was positive due to increased guidance and robust shareholder returns.
Q2-2025 Updates
Positive Updates
Strong Revenue and Operating Performance
Revenue increased by 9% compared to the first quarter of 2025, with all four segments contributing to growth. Segment operating margin stood at 11.8%.
Increased Guidance for Financial Metrics
The company increased its guidance for segment operating income, earnings per share, and free cash flow due to strong second-quarter results and a positive outlook for the second half of the year.
International Sales Growth
International sales grew by 18% year over year and 14% year to date, with strong demand in Europe and the Middle East.
Positive Developments in Sentinel Program
Significant progress was made on the Sentinel program, leading to a favorable earnings adjustment and improved confidence in achieving performance incentives.
Increased Defense Spending and Funding
The US and allies are increasing investments in defense capabilities, including a 22% increase in procurement and RDT&E over fiscal year 2025. B-21 and Sentinel programs received significant additional funding.
Record Shareholder Returns
The company repurchased nearly $900 million in stock and announced a 12% increase in quarterly dividends, marking the 22nd consecutive annual increase.
Negative Updates
Space Segment Decline
Q2 sales in the Space segment were lower, primarily due to the wind-down of work on two programs, resulting in a $283 million year-over-year headwind.
Tax Reform Impact
A change in tax treatment for certain R&D credits increased the effective tax rate, impacting the positive effects of strong operational performance.
Challenges in Command and Launch Segment of Sentinel
Work on the command and launch segment of the Sentinel program was paused, though it has now resumed with progress being made.
Company Guidance
During Northrop Grumman's second quarter 2025 conference call, the company reported a strong performance with a 9% increase in revenue compared to the first quarter and a segment operating margin of 11.8%. Looking ahead to the second half of the year, Northrop Grumman raised its guidance for segment operating income, earnings per share (EPS), and free cash flow. The company noted significant international sales growth of 18% year-over-year and highlighted key programs such as B-21, Sentinel, and E-2D, which received additional funding. Northrop Grumman plans to increase its solid rocket motor production from 13,000 units today to 25,000 by 2029, supported by investments in manufacturing capacity. Additionally, the company remains committed to returning capital to shareholders, having repurchased $900 million in stock in the first half of the year and increased its quarterly dividend by 12%.

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
75
Positive
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
70
Positive
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
65
Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue40.50B41.03B39.29B36.60B35.67B36.80B
Gross Profit7.83B8.36B6.55B7.47B7.27B7.48B
EBITDA6.83B6.84B4.23B7.68B8.73B5.59B
Net Income3.94B4.17B2.06B4.90B7.00B3.19B
Balance Sheet
Total Assets49.45B49.36B46.54B43.76B42.58B44.47B
Cash, Cash Equivalents and Short-Term Investments1.90B4.35B3.11B2.58B3.53B4.91B
Total Debt17.52B18.40B16.05B15.00B14.66B16.61B
Total Liabilities33.98B34.07B31.75B28.44B29.65B33.89B
Stockholders Equity15.47B15.29B14.79B15.31B12.93B10.58B
Cash Flow
Free Cash Flow1.31B2.62B2.10B1.47B2.15B2.88B
Operating Cash Flow2.97B4.39B3.88B2.90B3.57B4.30B
Investing Cash Flow-1.35B-1.75B-1.58B-1.24B2.06B-1.21B
Financing Cash Flow-3.00B-1.40B-1.76B-2.61B-7.00B-432.00M

Northrop Grumman Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price579.76
Price Trends
50DMA
553.77
Positive
100DMA
519.89
Positive
200DMA
497.38
Positive
Market Momentum
MACD
7.45
Positive
RSI
53.57
Neutral
STOCH
23.74
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NOC, the sentiment is Neutral. The current price of 579.76 is below the 20-day moving average (MA) of 584.39, above the 50-day MA of 553.77, and above the 200-day MA of 497.38, indicating a neutral trend. The MACD of 7.45 indicates Positive momentum. The RSI at 53.57 is Neutral, neither overbought nor oversold. The STOCH value of 23.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 "Production" 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

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$87.26B21.7817.91%1.81%11.85%16.12%
78
Outperform
$51.47B30.728.90%1.73%2.93%43.29%
77
Outperform
$84.38B21.6726.50%1.51%-0.65%77.20%
76
Outperform
$211.50B34.7210.13%1.65%15.44%164.00%
71
Outperform
$105.64B25.4873.06%2.89%1.09%-35.50%
64
Neutral
$10.73B15.657.58%2.01%2.80%-14.92%
58
Neutral
$179.50B-162.23%2.41%-193.57%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
NOC
Northrop Grumman
579.76
69.32
13.58%
BA
Boeing
230.75
68.60
42.31%
GD
General Dynamics
322.44
31.26
10.74%
LHX
L3Harris Technologies
272.99
45.10
19.79%
LMT
Lockheed Martin
456.85
-96.18
-17.39%
RTX
RTX
158.68
41.39
35.29%

Northrop Grumman Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
Northrop Grumman Secures $3 Billion Credit Facility
Positive
Sep 2, 2025

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.

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.Date of analysis: Sep 03, 2025