Northrop Grumman Corp.
NOC
$702.50
+0.79%
Northrop Grumman Corp. is a diversified defense contractor operating in the Aerospace & Defense industry. It is a major player known for its advanced autonomous aircraft, missile systems, and space technology, leveraging its position in critical national security programs.
NOC
Northrop Grumman Corp.
$702.50
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Investment Opinion: Should I buy NOC Today?
Based on a synthesis of strong fundamentals, positive analyst sentiment, and a supportive macro backdrop for defense, the objective data supports a 'Buy' rating for NOC. The rating is tempered by the stock's high valuation multiples following its strong performance, suggesting it may be more suitable for investors with a long-term horizon who can tolerate potential near-term volatility. This is an assessment of the available data, not personalized financial advice.
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NOC 12-Month Price Forecast
The fundamentals are strong, but the stock price already reflects much of the positive outlook. The risk/reward appears balanced at current levels, leaning towards a neutral stance with a watchful eye on valuation and debt.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Northrop Grumman Corp.'s 12-month outlook, with a consensus price target around $913.25 and implied upside of +30.0% versus the current price.
Average Target
$913.25
7 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
7
covering this stock
Price Range
$562 - $913
Analyst target range
Wall Street analyst consensus shows 13 analysts covering the stock. The average estimated EPS for the period is $36.50, with a high estimate of $37.33 and a low of $35.82. The average estimated revenue is $55.62 billion. Recent institutional ratings from firms like UBS, Citigroup, and B of A Securities are predominantly 'Buy' or equivalent, indicating a positive outlook from the analyst community.
Bulls vs Bears: NOC Investment Factors
Northrop Grumman exhibits strong fundamental performance with robust growth and cash generation, supported by a favorable geopolitical climate. However, the stock trades at premium valuations after a significant rally and carries risks related to its debt load and competitive pressures. The balance of factors leans positive but warrants caution.
Bullish
- Strong Revenue & Profit Growth: Q4 revenue grew 9.6% YoY, net margin improved to 12.18%.
- Robust Free Cash Flow: Generated $3.24B FCF last quarter, providing financial flexibility.
- High Return on Equity: ROE of 25.08% indicates efficient capital use.
- Geopolitical Tailwinds: Rising defense budgets create a sustained growth environment.
Bearish
- Elevated Debt Levels: Debt-to-equity ratio of 1.18 indicates high financial leverage.
- High Valuation Multiples: Forward P/E of 22.6 and PEG of 7.4 suggest premium pricing.
- Recent Price Pullback: Stock down 5.8% over the last month, underperforming SPY.
- Dependence on Government Spending: Revenue is sensitive to political and budgetary cycles.
NOC Technical Analysis
Overall Assessment: The stock has demonstrated significant strength over the past six months, rising 12.77% and significantly outperforming the broader market (SPY -2.82%). The price has surged from around $570 in late December 2025 to a recent high of $768.02 in March 2026, indicating a strong bullish trend. Short-term Performance: Over the last month, the stock has declined 5.82%, underperforming the SPY's -5.25% drop. However, its 3-month performance is exceptionally strong, up 19.65%, which dramatically outpaces the SPY's -4.63% change, showing robust relative strength during this period. Current Position: The current price of $682.24 sits approximately 88% of the way towards its 52-week high of $774.00 and is well above its 52-week low of $450.13. This places the stock in the upper portion of its yearly range, reflecting strong investor confidence despite the recent pullback from the March peak.
Beta
0.01
0.01x market volatility
Max Drawdown
-15.6%
Largest decline past year
52-Week Range
$450-$774
Price range past year
Annual Return
+37.2%
Cumulative gain past year
| Period | NOC Return | S&P 500 |
|---|---|---|
| 1m | -7.5% | -3.6% |
| 3m | +20.0% | -4.0% |
| 6m | +15.3% | -2.0% |
| 1y | +37.2% | +16.2% |
| ytd | +20.0% | -3.8% |
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NOC Fundamental Analysis
Revenue & Profitability: The company's most recent quarterly revenue (Q4 2025) was $11.71 billion, representing a 9.6% year-over-year growth. Net income for the quarter was $1.43 billion, yielding a net margin of 12.18%, which is an improvement from the 10.55% margin in the prior quarter (Q3 2025). Financial Health: The debt-to-equity ratio is elevated at 1.18, indicating a significant reliance on debt financing. However, the company generated strong free cash flow of $3.24 billion in the latest quarter and has a trailing twelve-month free cash flow of $3.31 billion, providing solid liquidity. Operational Efficiency: Return on Equity (ROE) is strong at 25.08%, indicating efficient use of shareholder capital. The current ratio of 1.09 suggests adequate, though not excessive, short-term liquidity to cover obligations.
Quarterly Revenue
$11.7B
2025-12
Revenue YoY Growth
+0.09%
YoY Comparison
Gross Margin
+0.19%
Latest Quarter
Free Cash Flow
$3.3B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is NOC Overvalued?
Valuation Level: Given the company's positive net income, the primary valuation metric is the Price-to-Earnings (P/E) ratio. The trailing P/E ratio is 19.57, while the forward P/E is 22.62 based on estimated EPS. The Price-to-Sales (P/S) ratio is 1.95, and the Enterprise Value-to-Sales (EV/Sales) is 2.63. Peer Comparison: Data not available for direct industry average comparisons. The valuation appears to reflect expectations for continued growth, supported by a forward P/E in the low 20s and a PEG ratio of 7.41, which suggests the market is pricing in significant future earnings growth.
PE
19.6x
Latest Quarter
vs. Historical
High-End
5-Year PE Range -33x~38x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.5x
Enterprise Value Multiple
Investment Risk Disclosure
The primary financial risk is the company's elevated debt-to-equity ratio of 1.18, which increases financial leverage and interest rate sensitivity. While strong free cash flow of over $3 billion provides a cushion, a downturn in defense spending or a rise in borrowing costs could pressure the balance sheet. Operationally, the company is exposed to the cyclicality of U.S. and allied defense budgets, which are subject to political negotiation and can be volatile despite current geopolitical support. Recent news also highlights intensifying competition in the space sector from private companies like SpaceX and Axiom Space, potentially threatening long-term growth in a key segment. Execution risks on major programs like the B-21 bomber are ever-present for a prime contractor.
FAQ
Key risks include its high financial leverage, with a debt-to-equity ratio of 1.18. The company is also reliant on U.S. government defense budgets, which are politically determined and can be cut. Competitive threats, particularly in the space segment from companies like SpaceX, pose a long-term risk. Finally, the stock's premium valuation makes it vulnerable to a de-rating if growth disappoints.
The 12-month outlook presents a base case target range of $682 to $774, aligning with the current price and the 52-week high. This assumes the company meets analyst EPS estimates of $36.50. The bull case (30% probability) targets $774-$850 on stronger growth, while the bear case (15% probability) could see a pullback to the $550-$650 range if risks materialize.
NOC appears fully valued or slightly overvalued based on traditional metrics. Its forward P/E of 22.6 is above the trailing P/E of 19.6, indicating the market is pricing in future growth. The high PEG ratio of 7.41 suggests the stock is expensive relative to its earnings growth rate. The valuation reflects optimism about sustained defense spending rather than a margin of safety.
NOC is a good stock for investors seeking exposure to the defense sector, given its strong fundamentals like 9.6% revenue growth and a 25% ROE. However, at a forward P/E of 22.6 and a high PEG ratio of 7.4, the stock is not cheap. A 'Buy' rating is supported by the data, but it may be prudent to average in over time rather than making a large lump-sum investment at current levels.
NOC is more suitable for a long-term investment horizon. Its business is tied to multi-year defense contracts and geopolitical trends that play out over years. The stock's premium valuation and recent volatility (-5.8% in the last month) make it less ideal for short-term trading. Long-term investors can benefit from the company's stable cash flows and dividend, currently yielding 1.58%.