Northrop Grumman Corporation
NOC
$585.87
+1.94%
Northrop Grumman Corporation is a diversified aerospace and defense contractor that designs and manufactures advanced aircraft, space systems, missile defense, and mission-critical electronics for the U.S. military and allied nations. As one of the world's largest defense primes, it holds a unique competitive position through flagship programs like the B-21 bomber, F-35 fuselage production, and a broad portfolio of autonomous systems and space technologies. The current investor narrative centers on the company's exposure to rising global defense budgets and geopolitical tensions, particularly the U.S. military's pivot toward AI-driven autonomous systems and space-based capabilities, while also grappling with supply chain risks and the financial impact of fixed-price development contracts. Recent headlines highlight the Pentagon's AI reallocation and the reshoring of rare earth supply chains, which could create both opportunities and headwinds for Northrop's growth trajectory.…
NOC
Northrop Grumman Corporation
$585.87
Related headlines
Investment Opinion: Should I buy NOC Today?
We rate NOC a Hold. The analyst consensus is Buy with an average target of $643.62, implying 13.4% upside, but the stock's recent momentum is negative. The thesis is that NOC is a quality defense contractor with a diversified portfolio, but near-term growth is decelerating and valuation is not compelling.
Sign up to view all
NOC 12-Month Price Forecast
The AI assessment is neutral, as the stock's valuation is not compelling given low growth, but the downside is limited by the low target. The key factor is whether NOC can re-accelerate growth through AI and space programs. If it does, the stock could re-rate higher; if not, it may continue to underperform. I would upgrade to bullish if revenue growth exceeds 8% or if the stock drops below $520, and downgrade to bearish if it breaks below $479.
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 $643.28 and implied upside of +9.8% versus the current price.
Average Target
$643.28
0 analysts
Implied Upside
+9.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$538 - $815
Analyst target range
The target price range spans from a low of $538.00 to a high of $815.00, representing a wide spread of $277.00, which indicates significant uncertainty about the stock's future performance. The low target of $538.00 is only 5.2% below the current price, suggesting that even the most bearish analyst sees limited downside, likely pricing in execution risks on fixed-price contracts and potential supply chain disruptions. The high target of $815.00 implies a 43.5% upside, which would require a substantial re-rating driven by accelerated growth from AI-driven defense programs and successful execution of the B-21 and other key programs. The wide range between the low and high targets reflects the market's divergent views on the impact of geopolitical tensions, budget cycles, and the company's ability to navigate the transition to next-generation defense technologies.
Bulls vs Bears: NOC Investment Factors
The bull case rests on a diversified defense portfolio, geopolitical tailwinds, and a reasonable PE, while the bear case highlights decelerating growth, a high PEG, and significant underperformance. Currently, the bearish evidence is stronger given the stock's persistent downtrend and valuation concerns. The key tension is whether NOC can re-accelerate growth through AI and space programs to justify its premium, or if execution issues will continue to drag earnings. If the company delivers on B-21 and autonomous systems, the stock could re-rate higher; otherwise, it risks further downside.
Bullish
- Strong Buy Consensus with 13.4% Upside: 21 analysts rate NOC a Buy with a mean recommendation of 1.96 and an average target of $643.62, implying 13.4% upside from the current $567.74. The high target of $815 suggests 43.5% potential if execution improves.
- Diversified Portfolio Across Defense Segments: Q1 2026 revenue of $9.88B is spread across Aeronautics ($3.28B), Mission Systems ($2.86B), Space ($2.48B), and Defense ($1.90B), reducing single-program risk. This diversification supports stable growth even as individual programs face headwinds.
- Geopolitical Tensions Boost Defense Demand: Recent U.S.-Iran strikes and the Pentagon's AI pivot are driving defense budget increases, directly benefiting NOC's advanced aircraft and space systems. The B-21 bomber and F-35 fuselage programs are positioned for multi-year growth.
- Reasonable Valuation at 19.6x Trailing PE: The trailing PE of 19.57x is below the 5-year average for defense primes and only slightly above the forward PE of 18.66x, implying modest growth expectations. This is not a stretched multiple for a company with stable earnings.
Bearish
- Severe Underperformance vs. Market: NOC fell 3.7% over the past year while the S&P 500 gained 21.5%, a relative strength of -25.1%. The stock is near its 52-week low of $479, down 26.6% from its high of $774, indicating persistent selling pressure.
- High PEG Ratio Signals Overvaluation: The PEG ratio of 7.41x is extremely elevated, suggesting the market is paying a premium for only ~4.9% expected earnings growth. This implies the stock is overvalued relative to its growth prospects.
- Revenue Growth Decelerating: Q1 2026 revenue growth slowed to 4.36% YoY from 9.3% in Q2 2025, indicating momentum is fading. Fixed-price development contracts are causing execution challenges and margin pressure.
- High Debt and Interest Burden: Debt-to-equity of 1.18x and interest expense of $162M in Q1 2026 consume a significant portion of operating income. Rising rates could further pressure earnings.
NOC Technical Analysis
Northrop Grumman's stock has been in a pronounced downtrend over the past year, with the price declining 3.66% over the last 12 months while the S&P 500 gained 21.46%, resulting in a relative strength of -25.12%. The current price of $567.74 sits at approximately 26% of its 52-week range (between the low of $479.02 and high of $774.00), indicating the stock is trading near the lower end of its yearly band, which often signals either a value opportunity or a falling knife depending on fundamental catalysts. The 6-month price change of -19.94% underscores the severity of the recent selloff, which has pushed the stock well below its February 2026 highs near $768.
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
+0.4%
Cumulative gain past year
| Period | NOC Return | S&P 500 |
|---|---|---|
| 1m | +11.5% | +2.9% |
| 3m | +8.4% | +5.0% |
| 6m | -16.6% | +13.9% |
| 1y | +0.4% | +20.4% |
| ytd | +0.0% | +13.8% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
NOC Fundamental Analysis
Northrop Grumman's revenue trajectory shows modest but steady growth, with Q1 2026 revenue of $9.881 billion representing a 4.36% year-over-year increase from $9.468 billion in Q1 2025. The multi-quarter trend reveals a deceleration from the 9.3% growth seen in Q2 2025 (revenue of $10.351 billion) to the current 4.36% pace, though the company has consistently grown revenue over the past five quarters. 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, indicating a diversified portfolio with no single segment dominating. The growth is being driven by increased demand for advanced aircraft and space systems, but the pace has moderated as some fixed-price development programs face execution challenges.
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
Open an Account, get $2 TSLA now!
Valuation Analysis: Is NOC Overvalued?
Given that Northrop Grumman is profitable with a trailing net income of $875 million in Q1 2026, the PE ratio is the most appropriate primary valuation metric. The trailing PE of 19.57x and forward PE of 18.66x are closely aligned, implying the market expects stable earnings growth of approximately 4.9% over the next year. The forward PE discount of 0.91x suggests modest growth expectations, which is consistent with the company's mature defense industry positioning. The PEG ratio of 7.41x indicates that the stock is priced at a significant premium to its expected earnings growth rate, which could be a red flag for value investors.
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 include a high debt-to-equity ratio of 1.18x, with interest expense of $162M in Q1 2026, which could strain earnings if rates rise. The company's net margin of 8.9% is thin for a defense prime, and fixed-price development contracts have caused margin volatility, as seen in Q1 2025's 5.1% net margin. Free cash flow of $3.31B TTM is positive but could be impacted by cost overruns on programs like B-21. Revenue concentration is moderate, but a slowdown in any major segment could hurt growth.
FAQ
The key risks are: 1) Execution risk on fixed-price development contracts, which have caused margin volatility (e.g., Q1 2025 net margin of 5.1%). 2) Supply chain risk from reliance on Chinese rare earths, which could disrupt production. 3) Macro risk from defense budget cuts or geopolitical shifts. 4) Valuation risk if the stock's premium multiple compresses. The most severe risk is a combination of cost overruns and supply chain issues, which could lead to a 15-20% downside.
The 12-month forecast is mixed. The base case (50% probability) targets $580-$650, with the average analyst target at $643.62. The bull case (25% probability) targets $650-$815, driven by accelerated defense spending. The bear case (25% probability) targets $479-$540, if execution issues persist. The most likely scenario is the base case, assuming stable defense budgets and modest growth.
NOC is fairly valued to slightly overvalued. The trailing PE of 19.57x is in line with the sector average, but the PEG ratio of 7.41x indicates that the market is paying a premium for low growth. Compared to its own history, the stock is trading near the lower end of its 52-week range, but the forward PE of 18.66x suggests modest expectations. The market is pricing in stable but slow growth, which is consistent with the company's outlook.
NOC is a moderate buy. The analyst consensus is Buy with an average target of $643.62, implying 13.4% upside. However, the stock has underperformed the market and has a high PEG ratio of 7.41x, suggesting it is not cheap. The biggest downside risk is execution on fixed-price contracts, which could lead to earnings misses. For long-term investors seeking defense exposure, NOC could be a good buy at current levels, but for short-term traders, the momentum is negative.
NOC is more suitable for long-term investment due to its stable defense business and dividend yield of 1.58%. The stock has a beta of -0.108, indicating low correlation with the market, which can provide diversification. However, short-term traders may find the stock unattractive due to negative momentum. A minimum holding period of 3-5 years is recommended to ride out volatility and benefit from defense spending cycles.