Northrop Grumman (NOC) AI Stock Analysis

• Market Cap: $81.13B
• Dividend Yield: 1.61%
• Average Volume (3M): 699.83K
• Price to Earnings (P/E): 20.4
• 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): 7.67
• Shares Outstanding: 142,720,060
• 10 Day Avg. Volume: 643,734
• 30 Day Avg. Volume: 699,831
• 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: 1.10
• Enterprise Value/Revenue: 2.17
• Enterprise Value/Gross Profit: 11.18
• Enterprise Value/Ebitda: 12.68
• 1Y Price Target: $685.31
• Price Target Upside: 20.56% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 14
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 76 Outperform
• Price Target: $626.00 ▲(10.12% Upside)

Northrop Grumman's overall stock score reflects strong financial performance and a positive earnings outlook, driven by robust international growth and strategic investments. However, technical indicators suggest bearish momentum, and valuation metrics indicate the stock is fairly valued. Concerns about revenue guidance revisions and potential impacts from government shutdowns are notable risks.

Positive Factors

Strong Cash Flow Generation

The significant increase in free cash flow indicates strong operational performance and enhances the company's ability to invest in growth opportunities and return capital to shareholders.

International Growth

Robust international growth expands Northrop Grumman's market presence and diversifies revenue streams, reducing reliance on domestic contracts and enhancing long-term stability.

New Contract Award

Securing new contracts strengthens Northrop Grumman's revenue base and demonstrates its competitive edge in securing government contracts, supporting sustained business growth.

Negative Factors

Revenue Guidance Revision

The revision of revenue guidance suggests potential challenges in meeting financial targets, which could affect investor confidence and long-term financial planning.

Space Segment Challenges

Challenges in the space segment may hinder growth prospects in a key area, impacting overall revenue and profitability if not addressed with new opportunities.

Impact of U.S. Government Shutdown

A prolonged government shutdown could disrupt cash flows and contract awards, posing risks to financial stability and operational continuity.

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

Northrop Grumman exhibits strong financial health with robust profitability, improved leverage, and solid cash flow generation. The company has effectively managed its operations to maintain healthy margins and growth. While the reduction in leverage is a positive development, historical high debt levels and slight margin pressures should be monitored.

Income Statement

Northrop Grumman's income statement shows strong profitability with a consistent gross profit margin of around 20% and a net profit margin close to 10% in the TTM period. The company has maintained a positive revenue growth rate, albeit slightly lower than previous years, indicating steady demand. EBIT and EBITDA margins remain healthy, reflecting efficient operations. However, the slight decline in gross profit margin from the previous year suggests potential cost pressures.

Balance Sheet

The balance sheet reflects a solid financial position with a low debt-to-equity ratio of 0.23 in the TTM period, significantly improved from previous years, indicating reduced leverage. Return on equity remains robust at over 26%, showcasing effective use of equity capital. The equity ratio is stable, suggesting a balanced asset structure. However, the historical high leverage in previous years poses a potential risk if not managed carefully.

Cash Flow

Cash flow analysis reveals strong free cash flow growth of over 40% in the TTM period, highlighting improved cash generation capabilities. The operating cash flow to net income ratio is healthy, indicating efficient conversion of income to cash. The free cash flow to net income ratio is over 50%, demonstrating good cash profitability. Despite these strengths, the decline in operating cash flow from the previous year warrants attention.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	40.93B	41.03B	39.29B	36.60B	35.67B	36.80B
Gross Profit	7.95B	8.36B	6.55B	7.47B	7.27B	7.48B
EBITDA	7.01B	6.84B	4.23B	7.68B	8.73B	5.59B
Net Income	4.02B	4.17B	2.06B	4.90B	7.00B	3.19B
Balance Sheet
Total Assets	49.30B	49.36B	46.54B	43.76B	42.58B	44.47B
Cash, Cash Equivalents and Short-Term Investments	1.96B	4.35B	3.11B	2.58B	3.53B	4.91B
Total Debt	16.96B	18.40B	16.05B	15.00B	14.66B	16.61B
Total Liabilities	33.31B	34.07B	31.75B	28.44B	29.65B	33.89B
Stockholders Equity	15.99B	15.29B	14.79B	15.31B	12.93B	10.58B
Cash Flow
Free Cash Flow	1.83B	2.62B	2.10B	1.47B	2.15B	2.88B
Operating Cash Flow	3.44B	4.39B	3.88B	2.90B	3.57B	4.30B
Investing Cash Flow	-1.29B	-1.75B	-1.58B	-1.24B	2.06B	-1.21B
Financing Cash Flow	-3.52B	-1.40B	-1.76B	-2.61B	-7.00B	-432.00M

Northrop Grumman Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 568.46
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• 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 568.46 is above the 20-day moving average (MA) of 560.17, below the 50-day MA of 573.63, and above the 200-day MA of 537.52, indicating a neutral trend. The MACD of -1.03 indicates Negative momentum. The RSI at 53.00 is Neutral, neither overbought nor oversold. The STOCH value of 60.91 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	80 Outperform	$91.67B	21.99	17.78%	1.73%	11.86%	17.39%
NOC	76 Outperform	$81.13B	20.41	26.15%	1.61%	-0.14%	72.35%
RTX	74 Outperform	$244.03B	37.37	10.49%	1.47%	8.79%	39.63%
LMT	70 Outperform	$109.71B	26.47	62.78%	2.84%	2.88%	-35.15%
LHX	70 Neutral	$53.77B	30.87	9.13%	1.67%	2.83%	47.00%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
BA	54 Neutral	$167.64B	-15.64	―	―	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.