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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

Northrop Grumman's recent performance was driven by strong Q2 2025 earnings and revenue beat, as well as a solid backlog and demand for its products. The company's 1% increase in sales to $10.4 billion, beating analyst estimates of $10.11 billion, was a key driver of its performance. Additionally, Northrop Grumman raised its full-year guidance for key financial metrics, including segment operating income and free cash flow, which contributed to the company's positive outlook. The company's strong international sales growth, with an 18% increase in the quarter, also supported its performance. Furthermore, Northrop Grumman's ability to deliver a strong second quarter, with increased sales and outstanding operating performance, was a testament to the company's solid fundamentals.

1.c. Company Highlights

2. Northrop Grumman's Q3 2025 Earnings: A Strong Performance

Northrop Grumman's third-quarter 2025 revenue was $10.4 billion, up 4% year-over-year, and 5% organically. The company achieved a book-to-bill ratio of 1.17, with an exceptionally strong performance in the Defense Systems segment, where sales grew 14% year-over-year. The company reported a segment operating margin of 12.3%, up 80 basis points year-over-year, and earnings per share of $7.67, up 10% year-over-year, beating analyst estimates of $6.44. Free cash flow increased by 72% year-over-year to $1.3 billion.

Publication Date: Oct -21

📋 Highlights
  • Revenue Growth:: Q3 revenue reached $10.4 billion, reflecting a 4% year-over-year increase, with 5% organic growth driven by strong performance in the Defense Systems segment (14% Y/Y sales growth).
  • Margin Expansion:: Segment operating margin improved to 12.3%, a 80 basis points increase YoY, alongside a 10% rise in earnings per share (EPS) to $7.67.
  • Free Cash Flow Surge:: Free cash flow surged 72% YoY to $1.3 billion, with full-year guidance reaffirmed at $3.05–$3.35 billion despite revenue guidance revisions.
  • Strategic Investments:: Over $2.1 billion allocated to R&D and 4% of sales to CapEx over two years, supporting capacity expansions like doubling tactical missile solid rocket motors production.
  • 2026 Outlook:: Anticipates mid-single-digit organic sales growth, low-to-mid 11% operating margins, and $3.1–$3.5 billion in free cash flow, with potential upside from B-21 program production rate increases.

Financial Performance

The company's financial performance was driven by the strong growth in the Defense Systems segment, with sales up 14% year-over-year. The segment operating margin rate also improved, driven by the company's focus on capacity and capability investments. The company's free cash flow guidance for the full year remains unchanged at $3.05 billion to $3.35 billion.

Outlook and Guidance

For 2026, Northrop Grumman expects mid-single-digit organic sales growth, a segment operating margin rate in the low to mid 11% range, and free cash flow of $3.1 billion to $3.5 billion. The company's guidance suggests a continued strong performance, driven by the growth in the Defense Systems segment and the expected increase in production rates for the B-21 program.

Valuation

Northrop Grumman's current valuation metrics are: P/E Ratio of 21.34, P/B Ratio of 5.36, P/S Ratio of 2.1, EV/EBITDA of 12.48, Dividend Yield of 1.46%, and Free Cash Flow Yield of 2.14%. The company's ROE is 26.04%, and ROIC is 9.61%. Analysts estimate next year's revenue growth at 5.1%. The current valuation suggests that the market is pricing in a moderate growth rate, but the company's strong performance and guidance suggest that it may be undervalued.

Program Updates

The B-21 program is seeing active discussions for a potential increase in production rate, which could have a material impact on the company's financials. Northrop Grumman has not included FXX or B-21 acceleration in its 2026 outlook, but a win would bring increased revenue and reasonable returns. The company is also working on missile defense and space opportunities, including the Golden Dome program.

Investment Highlights

The company's investments in capacity and capability, particularly in the Defense Systems segment, are expected to drive significant growth. CEO Kathy Warden mentioned that the investments are intended to drive significant growth, citing DS's solid growth rate the previous year. The company has also invested in research and development, with over $2.1 billion invested in internal research and development to maintain technology leadership and drive innovation.

3. NewsRoom

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Jared Isaacman Dodges Question On Whether Elon Musk Was Present When Trump Offered Him The NASA Administrator Job: 'Don't Think It's Fair'

Dec -04

Source: feeds.benzinga.com

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Northrop Grumman Corporation $NOC Shares Purchased by Arrowstreet Capital Limited Partnership

Dec -03

Source: defenseworld.net

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Market Today: Crypto Rout, Omnicom Cuts, Nvidia--Synopsys Deal

Dec -01

Source: gurufocus.com

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3 Stocks to Watch as Geopolitics Drives Defense Spending Boom

Dec -01

Source: zacks.com

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First Look: Airbus drops, Crypto slides, Cyber Monday

Dec -01

Source: gurufocus.com

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Ex-Dividend Reminder: ITT, Lockheed Martin And Northrop Grumman

Nov -28

Source: forbes.com

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Choreo LLC Sells 208 Shares of Northrop Grumman Corporation $NOC

Nov -28

Source: defenseworld.net

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NOC Secures a Contract to Aid Stand-In Attack Weapon Subsystem

Nov -26

Source: zacks.com

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

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L3Harris

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Growth: 5.7

Quality: 6.8

Yield: 4.0

Momentum: 8.0

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Northrop Grumman

A-Score: 6.0/10

Value: 3.5

Growth: 5.9

Quality: 6.6

Yield: 3.0

Momentum: 8.5

Volatility: 8.7

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Value: 2.3

Growth: 3.8

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Quality: 7.1

Yield: 0.0

Momentum: 7.5

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Lockheed Martin

A-Score: 4.7/10

Value: 2.8

Growth: 5.1

Quality: 4.5

Yield: 6.0

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GE

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Value: 0.7

Growth: 3.4

Quality: 6.6

Yield: 0.0

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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

548.97$

Current Price

548.97$

Potential

-0.00%

Expected Cash-Flows