Northrop Grumman (NOC) AI Stock Analysis

• Market Cap: $70.02B
• Dividend Yield: 1.69%
• Average Volume (3M): 1.29M
• Price to Earnings (P/E): 19.1
• Beta (1Y): 0.26
• Revenue Growth: 0.61%
• EPS Growth: 77.28%
• Country: US
• Employees: 97,000
• Sector: Industrials
• Sector Strength: 75
• Industry: Aerospace & Defense
• EPS (TTM): 25.41
• Shares Outstanding: 143,928,190
• 10 Day Avg. Volume: 1,740,107
• 30 Day Avg. Volume: 1,289,882
• PEG Ratio: 0.25
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.27
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 10.66
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $541.36
• Price Target Upside: 11.24% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16

Northrop Grumman's solid financial foundation and stable margins underpin its stock score. Key strengths include robust profitability and effective debt management, although challenges like revenue stagnation and recent operational setbacks weigh on the outlook. The stock's technical indicators suggest a cautious approach, balanced by reasonable valuation and positive earnings guidance.

Positive Factors

Defense Spending

Analysts maintain a Buy rating for Northrop Grumman, expecting the company to benefit from increases in US and Global defense spending.

International Growth

International sales tend to garner higher margins, providing Northrop Grumman yet another lever for margin expansion in the coming years.

Market Position

NOC is seen as an attractive defensive name ideal for weathering a prolonged market downturn.

Negative Factors

B-21 Program Challenges

A sales shortfall and B-21 charge drove Q1's miss.

Earnings Performance

Northrop Grumman reported 1Q25 adjusted EPS of $3.32, significantly below expectations, due to a pre-tax loss of $477 million from B-21 program issues.

International Relations

Trump's aggressive trade policies could make US allies reluctant to deal with US contractors, potentially hurting Northrop's international business.

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 makes money primarily through government contracts, particularly with the U.S. Department of Defense, which constitutes a significant portion of its revenue. The company is involved in long-term contracts to supply advanced defense systems, aircraft, and related services. It also earns revenue through international sales to allied nations, providing defense and aerospace systems tailored to specific requirements. Additionally, Northrop Grumman benefits from partnerships and collaborations with other leading defense contractors, expanding its reach and capabilities in areas like cybersecurity and space technology. The company's revenue model is heavily reliant on securing and executing defense and aerospace contracts, where it leverages its technological expertise and innovation to maintain a competitive edge.

Northrop Grumman Financial Statement Overview

Summary

Northrop Grumman demonstrates strong financial performance with robust profitability and a stable balance sheet. Despite decelerating revenue growth, margins and cash flows remain strong. Effective debt management and equity strength provide a solid foundation for navigating industry challenges.

Income Statement

Northrop Grumman's income statement shows solid profitability and revenue stability. The TTM (Trailing-Twelve-Months) gross profit margin is robust, indicating effective cost management. However, the recent decline in total revenue growth compared to the previous year suggests stagnation, which could pose a challenge if not addressed. Net profit margins remain strong, providing a solid bottom line.

Balance Sheet

The balance sheet reflects a healthy financial position with a strong equity base. The debt-to-equity ratio is favorable, showing good leverage management, and the equity ratio indicates solid asset coverage by equity. Return on equity is competitive, although it has seen slight fluctuations, which could be monitored for future stability.

Cash Flow

Cash flows are solid, with positive operating cash flow and consistent free cash flow generation. There is a slight decline in the free cash flow growth rate, but the company maintains a strong operating cash flow to net income ratio, reflecting efficient conversion of earnings to cash. This positions the company well for future investments and debt servicing.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
41.03B	39.29B	36.60B	35.67B	36.80B
	Gross Profit
8.36B	6.55B	7.47B	7.27B	7.48B
	EBIT
4.37B	2.54B	6.34B	5.65B	4.07B
	EBITDA
4.37B	4.23B	7.68B	8.73B	5.59B
	Net Income Common Stockholders
4.17B	2.06B	4.90B	7.00B	3.19B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.35B	3.11B	2.58B	3.53B	4.91B
	Total Assets
49.36B	46.54B	43.76B	42.58B	44.47B
	Total Debt
1.80B	15.68B	14.70B	14.37B	16.35B
	Net Debt
-2.56B	12.57B	12.12B	10.84B	11.44B
	Total Liabilities
34.07B	31.75B	28.44B	29.65B	33.89B
	Stockholders Equity
15.29B	14.79B	15.31B	12.93B	10.58B
Cash Flow		Free Cash Flow
2.62B	2.10B	1.47B	2.15B	2.88B
	Operating Cash Flow
4.39B	3.88B	2.90B	3.57B	4.30B
	Investing Cash Flow
-1.75B	-1.58B	-1.24B	2.06B	-1.21B
	Financing Cash Flow
-1.40B	-1.76B	-2.61B	-7.00B	-432.00M

Northrop Grumman Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 486.67
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Negative
• 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 Negative. The current price of 486.67 is below the 20-day moving average (MA) of 501.13, below the 50-day MA of 490.39, and below the 200-day MA of 491.42, indicating a bearish trend. The MACD of -4.47 indicates Positive momentum. The RSI at 46.41 is Neutral, neither overbought nor oversold. The STOCH value of 37.63 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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	$73.04B	18.89	18.23%	2.09%	14.11%	17.65%
LMT	79 Outperform	$111.93B	20.64	82.55%	2.70%	3.12%	-15.29%
HII	77 Outperform	$9.04B	16.50	12.56%	2.30%	0.71%	-18.39%
NOC	73 Outperform	$70.02B	19.15	25.41%	1.69%	0.61%	77.28%
LHX	72 Outperform	$41.13B	26.07	8.49%	2.13%	5.39%	36.86%
Sector *	63 Neutral	$4.23B	11.54	5.34%	209.77%	4.14%	-9.49%
BA	52 Neutral	$138.16B	―	-162.23%	―	-9.15%	-406.76%

Northrop Grumman Corporate Events

Northrop Grumman Sets 2025 Executive Compensation Goals

On February 18, 2025, Northrop Grumman’s Board approved compensation-related actions for its executives, setting 2025 goals under the Incentive Compensation Plan with financial and non-financial metrics. The Board also awarded Restricted Performance Stock Rights and amended the Severance Plan to reduce the severance timeframe and adjust bonus determination. Additionally, Graham Robinson announced he will not seek re-election to the Board at the 2025 Annual Meeting.