Northrop Grumman Corporation
NOC
$551.03
-2.28%
Northrop Grumman Corporation is a diversified aerospace and defense technology company that designs, develops, and manufactures advanced aircraft, space systems, missile defense, and mission-critical electronics for U.S. and allied government customers. As one of the world's largest defense contractors, it holds a unique competitive position with flagship programs like the B-21 Raider bomber, the F-35 fuselage, and the Global Hawk autonomous aircraft, making it a cornerstone of U.S. national security strategy. The current investor narrative centers on the company's role in the Pentagon's pivot toward AI-driven autonomous systems and next-generation deterrence, with recent geopolitical tensions (e.g., U.S.-Iran strikes) and supply chain reshoring efforts (rare earth magnets) creating both tailwinds and operational challenges. Despite a sharp stock drawdown in 2026, analysts remain constructive, citing a robust backlog and long-term growth from modernization budgets.…
NOC
Northrop Grumman Corporation
$551.03
Related headlines
Investment Opinion: Should I buy NOC Today?
Rating: Hold. Northrop Grumman is a quality defense contractor with a strong backlog and strategic importance, but its current valuation and growth trajectory do not offer compelling upside. The consensus 'Buy' rating and average target of $647.14 suggest modest upside, but the stock's recent underperformance and high PEG ratio warrant caution.
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NOC 12-Month Price Forecast
The AI assessment is neutral with medium confidence. While Northrop's strategic position in defense and space is strong, the current valuation and growth trajectory do not offer compelling risk/reward. The stock's high PEG ratio and decelerating revenue growth suggest limited upside potential. However, if geopolitical tensions escalate or the company delivers stronger-than-expected earnings, the stance could upgrade to bullish. Conversely, a continued decline in growth or a market-wide de-rating could lead to a bearish stance.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Northrop Grumman Corporation's 12-month outlook, with a consensus price target around $647.14 and implied upside of +17.4% versus the current price.
Average Target
$647.14
0 analysts
Implied Upside
+17.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$538 - $815
Analyst target range
Northrop Grumman is covered by 21 analysts, with a consensus recommendation of 'Buy' and a mean rating of 2.09 (where 1 is Strong Buy and 5 is Sell). The average target price is $647.14, implying an upside of 17.4% from the current price of $551.03. The distribution is bullish, with no Sell ratings and a majority of Buy/Overweight ratings, though recent actions have been mostly neutral (Goldman Sachs, TD Cowen, Jefferies) with some Buy reiterations (Citigroup, UBS, Morgan Stanley).
Bulls vs Bears: NOC Investment Factors
Northrop Grumman presents a mixed picture: strong strategic positioning in defense and space, backed by a robust backlog and positive analyst sentiment, but offset by high valuation, decelerating growth, and operational risks. The bearish case currently holds more weight due to the stock's significant underperformance and premium valuation relative to its modest growth prospects. The most critical tension is whether the company can translate its program wins and geopolitical tailwinds into accelerated revenue growth and margin expansion, justifying its premium multiple. If growth reaccelerates and supply chain issues are resolved, the stock could re-rate higher; otherwise, further downside is likely.
Bullish
- Robust Backlog and Strategic Programs: Northrop Grumman's flagship programs like the B-21 Raider and F-35 fuselage provide multi-year revenue visibility. The company's backlog remains strong, underpinning future growth despite near-term volatility.
- Geopolitical Tailwinds: Recent U.S.-Iran strikes and the Pentagon's pivot to AI-driven autonomous systems are boosting defense spending. Northrop is well-positioned to benefit from increased demand for missile defense and space systems.
- Positive Analyst Sentiment: With a consensus 'Buy' rating and an average target price of $647.14, analysts see 17.4% upside from the current price of $551.03. No sell ratings and a mean recommendation of 2.09 indicate strong institutional confidence.
- Defensive Characteristics: The stock's beta of -0.108 suggests it moves inversely to the market, providing a hedge during broader selloffs. This defensive quality is attractive for risk-averse investors.
Bearish
- Significant Underperformance vs. Market: The stock has declined 23.84% over the past six months and underperformed the S&P 500 by 28.21% over the past year. This persistent weakness suggests structural headwinds beyond market volatility.
- High Valuation Relative to Growth: With a PEG ratio of 7.41x, the stock is expensive relative to its expected earnings growth of ~8%. The forward PE of 18.10x is above the sector average, implying limited margin of safety.
- Decelerating Revenue Growth: Q1 2026 revenue growth slowed to 4.36% YoY, down from the 10.5% growth seen in Q4 2025. This deceleration raises concerns about the sustainability of top-line momentum.
- Supply Chain Vulnerabilities: The heavy reliance on Chinese rare earth magnets for drone production poses a significant operational risk. Government-mandated supply chain overhauls by 2027 could disrupt production timelines and inflate costs.
NOC Technical Analysis
Northrop Grumman's stock is in a clear downtrend over the past year, with a 1-year price change of -7.73% and a 6-month decline of -23.84%. The current price of $551.03 sits at 71.2% of its 52-week range (between the low of $479.02 and high of $774.00), indicating the stock is closer to the lower end of its range, reflecting persistent selling pressure and a bearish long-term structure. The stock's beta of -0.108 suggests it has been negatively correlated with the market, providing a defensive hedge, but its relative strength versus the S&P 500 over 1 year is -28.21%, showing significant underperformance.
Beta
-0.11
-0.11x market volatility
Max Drawdown
-35.4%
Largest decline past year
52-Week Range
$479-$774
Price range past year
Annual Return
-7.7%
Cumulative gain past year
| Period | NOC Return | S&P 500 |
|---|---|---|
| 1m | +4.9% | +3.6% |
| 3m | -0.8% | +2.7% |
| 6m | -23.8% | +11.4% |
| 1y | -7.7% | +18.7% |
| ytd | -5.9% | +12.3% |
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NOC Fundamental Analysis
Northrop Grumman's revenue trajectory is modestly positive, with Q1 2026 revenue of $9.881 billion, up 4.36% year-over-year, and a sequential improvement from Q1 2025's $9.468 billion. However, growth has been uneven: Q2 2025 revenue was $10.351 billion, Q3 2025 was $10.423 billion, and Q4 2025 was $11.712 billion, indicating a deceleration in the most recent quarter. Segment performance shows Aeronautics Systems leading at $3.283 billion, followed by Mission Systems at $2.861 billion, Space Systems at $2.480 billion, and Defense Systems at $1.899 billion, with the latter two likely driving growth due to missile defense and space modernization programs.
Quarterly Revenue
$9.9B
2026-03
Revenue YoY Growth
+4.4%
YoY Comparison
Gross Margin
19.8%
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?
Given Northrop Grumman's positive net income, the PE ratio is the primary valuation metric. The trailing PE is 19.57x, while the forward PE is 18.10x, implying the market expects earnings growth of approximately 8% over the next year. This modest forward discount suggests a stable outlook, but the PEG ratio of 7.41x indicates that the stock is expensive relative to its expected growth rate, which is low for a defense contractor. The EV/EBITDA of 13.49x is also above the sector average, reflecting a premium valuation.
PE
19.6x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 10x~28x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.5x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks are notable: Northrop's debt-to-equity ratio of 1.18 indicates high leverage, and interest expenses have risen to $162 million in Q1 2026, up from $156 million a year earlier. The company's free cash flow of $3.3 billion (TTM) covers interest, but the high payout ratio of 30.9% and modest growth suggest limited financial flexibility. Additionally, the PEG ratio of 7.41x implies the market is pricing in minimal earnings growth, making the stock vulnerable to any negative earnings surprise.
FAQ
The key risks include: 1) Financial risk from high debt (debt-to-equity of 1.18) and rising interest expenses, which could pressure margins. 2) Operational risk from supply chain vulnerabilities, particularly reliance on Chinese rare earth magnets, which could disrupt production and increase costs. 3) Market risk from valuation compression if growth decelerates further, as the stock trades at a premium to peers. 4) Geopolitical risk, though generally a tailwind, could reverse if defense budgets are cut or conflicts de-escalate. The most severe risk is a combination of these factors leading to a decline toward the 52-week low of $479.02, representing a -13% downside from the current price.
The 12-month forecast is mixed. The base case (50% probability) sees the stock trading around the analyst average target of $647.14, implying 17.4% upside. The bull case (25% probability) could push the stock to $650-$750 if geopolitical tensions escalate and growth reaccelerates. The bear case (25% probability) could see the stock fall to $450-$550 if growth disappoints or supply chain issues worsen. The most likely scenario is the base case, assuming moderate growth and stable margins. Investors should monitor quarterly earnings and geopolitical developments for signs of which scenario is unfolding.
NOC is trading at a forward PE of 18.10x, which is above the sector average of ~15x, indicating a premium valuation. The PEG ratio of 7.41x suggests the stock is expensive relative to its expected earnings growth of ~8%. Compared to its own history, the current PE is in line with its 5-year average, but the market is pricing in modest growth. The EV/EBITDA of 13.49x also exceeds the sector average, reinforcing the view that NOC is not undervalued. The market expects stable but low growth, and any disappointment could lead to multiple compression.
NOC is a hold for most investors. The stock offers a 17.4% upside to the average analyst target of $647.14, but the high PEG ratio of 7.41x and decelerating revenue growth suggest limited near-term gains. The biggest downside risk is a further de-rating if growth disappoints, potentially pushing the stock toward the 52-week low of $479.02. For long-term investors seeking defense exposure with a defensive profile, NOC could be a reasonable addition, but for growth-oriented investors, better opportunities may exist elsewhere.
NOC is better suited for long-term investment due to its defensive characteristics, stable cash flows, and dividend yield of 1.58%. The stock's low beta (-0.108) provides a hedge against market volatility, making it a good portfolio diversifier. However, its modest growth and high valuation limit short-term trading potential. A minimum holding period of 3-5 years is recommended to ride out cyclical defense spending fluctuations and benefit from the company's strategic programs. Short-term traders may find better opportunities in higher-growth names, but NOC offers stability for long-term investors.