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Northrop Grumman Corp NOC

Morningstar Rating
$460.08 +5.18 (1.14%)
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Company Report

Northrop Earnings: Free Cash Flow Rules the Day, Notwithstanding Some Cost Pressure; Valuation Up 8%

Northrop Grumman reported 2023 fourth-quarter and annual results mostly consistent with our 2023 forecast except for a charge against future profits on the B-21 Bomber program. Nonetheless, our outlook for the firm's ability to generate free cash flow, buy back shares, and eke out incremental profitability on its major programs over time remains, and we have increased our fair value estimate from $446 to $480 per share. We also added the time value of money to our fair value estimate since we last published our model and noted an improvement in Northrop's working capital position that seems likely to persist enough to also nudge our free cash flow estimates upward.

Price vs Fair Value

NOC is trading at a 4% discount.
Price
$460.08
Fair Value
$642.00
Uncertainty
Medium
1-Star Price
$449.00
5-Star Price
$835.00
Economic Moat
Mykmq
Capital Allocation
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Bulls Say, Bears Say

Bulls

Northrop Grumman has won the Ground Based Strategic Deterrent and B-21 bomber programs, both of which should drive material top-line growth over the next few decades.

Bears

Northrop Grumman depends on U.S. military funding for its sales, which is an inherently political and thus uncertain process.

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News

Trading Information

Previous Close Price
$454.90
Day Range
$455.45461.23
52-Week Range
$414.56496.89
Bid/Ask
$451.17 / $460.08
Market Cap
$69.03 Bil
Volume/Avg
692,838 / 799,754

Key Statistics

Price/Earnings (Normalized)
21.22
Price/Sales
1.78
Dividend Yield (Trailing)
1.63%
Dividend Yield (Forward)
1.63%
Total Yield
3.80%

Company Profile

Northrop Grumman is a diversified defense contractor providing aeronautics, defense, and space systems. The company’s aerospace segment creates the fuselage for the massive F-35 program and produces autonomous and piloted aircraft such as Global Hawk drones and the new B-21 bomber. Defense systems makes artillery and missile ammunition and guidance systems, missile defense systems, and conducts maintenance and upgrades on numerous military aircraft. Mission systems creates and integrates a variety of radar, navigation, and communication systems for avionics, weapons control, and countermeasures on a range of platforms from helicopters to destroyers. Finally, space systems produces satellites, sensors, space structures, and manufactures long-range missiles and rocket motors.
Sector
Industrials
Industry
Aerospace & Defense
Stock Style Box
Large Core
Total Number of Employees
101,000

Competitors

Valuation

Metric
NOC
BA
LMT
Price/Earnings (Normalized)
21.2215.47
Price/Book Value
4.6715.29
Price/Sales
1.781.561.61
Price/Cash Flow
17.4064.9313.37
Price/Earnings
NOC
BA
LMT

Financial Strength

Metric
NOC
BA
LMT
Quick Ratio
0.860.280.99
Current Ratio
1.151.141.21
Interest Coverage
5.300.189.84
Quick Ratio
NOC
BA
LMT

Profitability

Metric
NOC
BA
LMT
Return on Assets (Normalized)
5.27%−1.22%12.76%
Return on Equity (Normalized)
15.47%78.91%
Return on Invested Capital (Normalized)
9.27%0.74%30.39%
Return on Assets
NOC
BA
LMT
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