NOC
Northrop Grumman Corporation$759.11
Sell
Target $554.83
Report: Mar 07, 2026Industrials • Aerospace & Defense • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$759.11-26.9%
Rec: SellConviction: High
Entry Target
N/A
N/A
Fair Value
$554.83
(27% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$774.00
52 Week Low$450.13
Avg. 3 Month Volume966K
Efficiency
LTM Gross Margin19.8%
LTM EBITDA Margin17.2%
LTM EBIT Margin13.7%
LTM Operating Margin10.2%
LTM ROA8.4%
LTM ROE26.5%
LTM ROIC17.5%
LTM ROCE15.9%
Capital Structure
Market Cap (MM)$96.8B
Enterprise Value (MM)$109.4B
Shares Outstanding142.60M
Total Debt (MM)$17.02B
Cash & Equivalents (MM)$4.40B
LTM Net Debt (MM)$12.62B
LTM Net Debt/EBITDA1.8x
Growth
TTM Rev. Growth2.2%
Last 3-Yr Rev. CAGR4.7%
Last 3-Yr EBITDA CAGR-2.1%
Last 3-Yr EPS CAGR-2.6%
Valuation
Street Target Price$736.31
LTM EV/Revenue2.6x
LTM EV/Gross Profit13.2x
LTM EV/EBIT19.1x
LTM EV/EBITDA15.2x
LTM P/E23.2x
LTM EV/FCF33.1x
LTM P/FCF29.3x
LTM P/TB2.9x
LTM P/B5.8x
Dividend Yield1.3%
Payout Ratio30.8%
Executive SummarySituation: Current price is $759.11 versus fair value $554.83 (-26.9% expected return), and valuation confidence is stable. Debate: Bull case depends on B-21 Raider Lot 3 Award and Production Ramp. Bear case centers on Fixed-Price Contract Exposure. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
The record $95.7 billion backlog provides unprecedented revenue visibility and a 1.14x FCF-to-Net Income conversion rate. International sales growth of 20% YoY and a book-to-bill ratio of 1.45 suggest a significant untapped global opportunity for missile defense and stealth platforms.
Bear Case
Incremental ROIC has collapsed to 0.3%, indicating that the $7.6 billion in cumulative CapEx is failing to generate returns above the 9.5% WACC. The 30.5x P/FCF multiple is a 12.5% premium to the 3-year average, despite a 30% slowdown in revenue growth from 4.7% to 2.2%.
Key Catalysts
Mid-Term (6-18 months)Impact: Critical
B-21 Raider Lot 3 Award and Production Ramp. The market expects this to be the primary margin expansion driver, but any further loss provisi...
Near-Term (0-6 months)Impact: High
Sentinel Program Restructuring. The resolution of the Nunn-McCurdy cost breach and the establishment of new baseline costs will determine th...
Long-Term (18+ months)Impact: Moderate
Northrop Grumman is relevant for analysis now because it is trading near its 52-week high of $774.00 despite a structural break in its margi...
Primary Risks
Concern: High
Fixed-Price Contract Exposure. The B-21 Raider program's Low-Rate Initial Production (LRIP) lots are under fixed-price terms, making the com...
Concern: Medium
Capital Structure Fragility. The use of $5.3 billion in debt to fund buybacks has pushed the debt-to-equity ratio to 102.1% and resulted in...
Concern: Medium
The stewardship verdict is 'Status Quo with Rising Risk.' Management is executing a standard defense prime playbook of returning 100% of FCF...
Recent Activity
2025-07-22SEC Filing (8-K)
+9.41%Northrop Grumman reports Q2 2025 results with $10.4B sales, $1.2B net earnings, and $8.15 diluted EPS.
2025-04-22SEC Filing (8-K)
-12.66%Northrop Grumman reports Q1 2025 results with $9.5B sales, $481M net earnings, and $3.32 diluted EPS.
2024-07-25SEC Filing (8-K)
+6.43%Northrop Grumman reports Q2 2024 results with $10.2B sales, $940M net earnings, and $6.36 diluted EPS.
2024-01-25SEC Filing (8-K)
-6.33%Northrop Grumman reports Q4 and full-year 2023 financial results with $1.56B B-21 charge and record $84.2B backlog
2023-01-13Analyst Target
-5.44%Firm: Goldman Sachs Price Target: $375.00 Price When Posted: $487.98 Implied Downside: -23.2%
Valuation Table
9.8/10Decision Grade
Scenario Range
$432
Bear
$568
Base
$714
Bull
$759