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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on NOC

The recent 3-month performance of Northrop Grumman Corporation was driven by a series of positive events. The company's Q4 2025 earnings release and 2026 guidance update triggered a Buy signal, which was subsequently confirmed by the market. This was followed by a Power Inflow alert, a key bullish indicator, which led to a 4% increase in the stock price. Additionally, the company's share price hit a new 52-week high, trading as high as $683.01, after announcing better-than-expected quarterly earnings. Furthermore, institutional investors such as Bank of New York Mellon Corp and First Command Advisory Services Inc. increased their holdings in the company, with Bank of New York Mellon Corp boosting its position by 26.7% in the undefined quarter.

1.c. Company Highlights

2. Northrop Grumman's Strong 2025 Results Set Stage for Continued Growth

Northrop Grumman's financial performance in 2025 was impressive, with sales and EPS exceeding the high end of their guidance range. The company's EPS came in at $7.23, beating analyst estimates of $6.98. The strong EPS result was driven by robust demand for Northrop Grumman's capabilities, with sales growth fueled by a record backlog of over $95 billion. The company's free cash flow also saw a significant increase, reaching $3.3 billion, a 26% increase from 2024.

Publication Date: Feb -02

📋 Highlights
  • Record Backlog Growth:: Northrop Grumman's backlog reached $95 billion in 2025, driven by $46 billion in net awards, with a five-year book-to-bill ratio of 1.1x.
  • Exceeded Financial Guidance:: Sales and EPS surpassed 2025 guidance, with free cash flow surging to $3.3 billion (+26% YoY) and a $20 billion backlog increase since 2021.
  • Production Capacity Expansion:: Doubled tactical solid rocket motor production at ABL facility and plans to boost capacity by 50% by 2027 to meet demand.
  • 2026 Sales Guidance:: Expected sales of $43.5–44 billion (mid-single-digit growth), with Q1 growth accelerating as the year progresses.
  • International Growth Momentum:: Received IDCS acquisition requests from over 20 countries and anticipates $11 billion in 2026 Space segment sales, driven by restricted programs.

Record Backlog and Growth Prospects

The company's backlog has grown by nearly $20 billion since 2021, driven by net awards of $46 billion in 2025. Northrop Grumman's portfolio is well-aligned with US and international customers' needs, positioning the company for continued growth. The company's international growth strategy is focused on exporting products manufactured in the US and forming industrial partnerships to develop indigenous capabilities, with notable progress seen in multiple opportunities, including formal requests to acquire IDCS from over 20 countries.

2026 Guidance and Outlook

Northrop Grumman's 2026 guidance is consistent with the outlook provided in October, with expected sales between $43.5 billion and $44 billion, representing mid single-digit growth. The company expects segment operating income to be between $4.85 and $5 billion, reflecting continued strong performance and a low to mid 11% segment operating margin. Analysts estimate next year's revenue growth at 6.1%, which is slightly higher than the company's guidance.

Valuation and Return Metrics

To understand what's priced into Northrop Grumman's stock, we can look at various valuation metrics. The company's P/E Ratio is 23.65, P/B Ratio is 5.93, and P/S Ratio is 2.34. Additionally, the EV/EBITDA ratio is 21.22, and the ROE is 26.5%. These metrics suggest that the company's strong financial performance and growth prospects are reflected in its valuation.

Capital Deployment and Dividend Strategy

Northrop Grumman plans to pay down $527 million of fixed-rate debt in March and invest $1.65 billion in capital expenditures, approximately 4% of total sales. The company expects to have a balanced approach to their 2026 plan, incorporating clear funding and accumulated backlog. The company's dividend strategy is also under review, with a dividend policy review scheduled for May.

3. NewsRoom

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Defense Behemoths: Winners and Loser During Q4 Earnings Cycle

Feb -02

Source: marketbeat.com

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Northrop Grumman Corporation $NOC Shares Sold by Federated Hermes Inc.

Jan -30

Source: defenseworld.net

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Bank of New York Mellon Corp Has $640.53 Million Stock Position in Northrop Grumman Corporation $NOC

Jan -29

Source: defenseworld.net

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Microsoft Stock Down 12%: The $750 Billion Reason to Buy the Dip

Jan -29

Source: investorplace.com

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Quantum's Next Winners? 3 Enablers With 10%+ Projected Growth in 2026

Jan -28

Source: zacks.com

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Northrop Grumman Flashed a Buy Signal—And the Market Backed It Up

Jan -28

Source: marketbeat.com

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These Analysts Boost Their Forecasts On Northrop Grumman After Better-Than-Expected Q4 Results

Jan -28

Source: benzinga.com

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Northrop Grumman Q4 Earnings Call Highlights

Jan -28

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.23%)

6. Segments

Aeronautics Systems

Expected Growth: 7.4%

Northrop Grumman’s Aeronautics Systems segment is expected to grow driven by increasing demand for autonomous unmanned aerial vehicles, advanced sensors, and cyber capabilities. The segment will also benefit from the company’s investments in digital engineering and advanced manufacturing technologies.

Space Systems

Expected Growth: 7.5%

Northrop Grumman Corporation's Space Systems segment is expected to grow, driven by increasing demand for space-based surveillance and communication systems, as well as investments in satellite technology and launch services

Mission Systems

Expected Growth: 4.3%

Northrop Grumman's Mission Systems' advanced defense technologies drive growth, fueled by increasing global security threats and government investments in modernizing defense infrastructure.

Defense Systems

Expected Growth: 4.9%

Northrop Grumman's Defense Systems segment is expected to grow due to increasing global defense spending, driven by modernization initiatives and rising threats from terrorism and cyberattacks.

Intersegment Eliminations

Expected Growth: 4.6%

Northrop Grumman’s elimination of intercompany transactions is expected to drive growth, driven by increased operational efficiency, reduced complexity, and enhanced transparency.

7. Detailed Products

Autonomous Systems

Northrop Grumman's Autonomous Systems segment provides unmanned systems, including the MQ-4C Triton and the E-2D Advanced Hawkeye, which are used for surveillance, reconnaissance, and combat missions.

Cyber Solutions

Northrop Grumman's Cyber Solutions segment provides cybersecurity solutions, including threat detection, incident response, and penetration testing, to protect government and commercial customers from cyber threats.

Electronic Systems

Northrop Grumman's Electronic Systems segment provides electronic systems, including radar, communication systems, and electronic warfare systems, for military and civilian customers.

Innovation Systems

Northrop Grumman's Innovation Systems segment provides launch vehicles, satellites, and spacecraft, including the Antares rocket and the Cygnus spacecraft, for government and commercial customers.

Mission Systems

Northrop Grumman's Mission Systems segment provides command and control systems, intelligence systems, and logistics and modernization services for government customers.

Technology Services

Northrop Grumman's Technology Services segment provides IT services, including cloud computing, data analytics, and cybersecurity, to government and commercial customers.

8. Northrop Grumman Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Northrop Grumman Corporation's products and services are highly specialized, making it difficult for substitutes to emerge. However, the company's reliance on government contracts makes it vulnerable to changes in government priorities and budgets.

Bargaining Power Of Customers

Northrop Grumman Corporation's customers are primarily government agencies, which have limited bargaining power due to the specialized nature of the company's products and services.

Bargaining Power Of Suppliers

Northrop Grumman Corporation relies on a diverse supply chain, which reduces the bargaining power of individual suppliers. However, the company's reliance on certain critical components and technologies makes it vulnerable to supply chain disruptions.

Threat Of New Entrants

The barriers to entry in the defense industry are high, making it difficult for new entrants to compete with established players like Northrop Grumman Corporation. The company's expertise, reputation, and government relationships also create significant entry barriers.

Intensity Of Rivalry

The defense industry is highly competitive, with several established players competing for limited government contracts. Northrop Grumman Corporation faces intense rivalry from companies like Lockheed Martin, Boeing, and Raytheon Technologies.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 54.79%
Debt Cost 3.97%
Equity Weight 45.21%
Equity Cost 5.61%
WACC 4.71%
Leverage 121.18%

11. Quality Control: Northrop Grumman Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Northrop Grumman

A-Score: 6.2/10

Value: 3.6

Growth: 5.9

Quality: 6.4

Yield: 3.0

Momentum: 9.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
L3Harris

A-Score: 6.0/10

Value: 2.8

Growth: 5.6

Quality: 5.4

Yield: 4.0

Momentum: 8.5

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Raytheon Technologies

A-Score: 5.5/10

Value: 2.3

Growth: 3.4

Quality: 5.0

Yield: 4.0

Momentum: 9.5

Volatility: 8.7

1-Year Total Return ->

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HEICO

A-Score: 5.4/10

Value: 0.4

Growth: 8.4

Quality: 6.9

Yield: 0.0

Momentum: 8.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Lockheed Martin

A-Score: 5.1/10

Value: 2.8

Growth: 5.1

Quality: 4.5

Yield: 6.0

Momentum: 3.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
GE

A-Score: 4.8/10

Value: 0.7

Growth: 3.4

Quality: 6.8

Yield: 0.0

Momentum: 9.5

Volatility: 8.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

701.25$

Current Price

701.25$

Potential

-0.00%

Expected Cash-Flows