Northrop Grumman (NOC): A Fresh Look at Valuation During a Quiet Stretch

Northrop Grumman (NOC) has caught investor attention again this week, even in the absence of headline-making news or a specific market-moving event. Sometimes, these quieter stretches can be just as interesting, prompting thoughtful investors to look closer. Did something change beneath the surface, or is the market simply reassessing the company’s longer-term prospects? For shareholders, these periods often signal an opportunity to reassess valuation and refocus on fundamentals.

Looking at a broader context, Northrop Grumman has experienced both ebbs and flows over the past year. The stock has gained around 14% in the past 12 months and almost 24% since the start of the year, indicating that momentum has built recently compared to the broader market. While the past month was relatively flat, shares picked up over the past 3 months. Underlying this performance, the company posted annual revenue and net income growth of about 5% each.

With this steady performance and recent momentum, the key question becomes: is Northrop Grumman undervalued at current levels, or are investors already pricing in its future growth potential?

Most Popular Narrative: 3.9% Undervalued

The dominant narrative rates Northrop Grumman as moderately undervalued, with fair value estimates suggesting room for upside despite near-term valuation concerns.

Accelerating U.S. and allied defense spending, supported by substantial increases in procurement and RDT&E budgets (for example, a 22% increase in U.S. spending for FY26) and significant new funding for key Northrop Grumman programs (B-21, Sentinel, and E-2D), is expected to drive sustained revenue growth and provide multi-year order visibility.

Is Wall Street too cautious, or do the bulls have the blueprint for a defense giant’s next big move? The answer lies in explosive revenue forecasts, shrinking profit margins, and a future earnings multiple that defies industry standards. Want the story behind these aggressive targets and what could send shares even higher? Keep your eye on what really moves the fair value calculation.

Result: Fair Value of $603.32 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent reliance on large U.S. contracts and rapid shifts in global defense spending priorities could quickly reshape Northrop Grumman’s growth outlook.

Find out about the key risks to this Northrop Grumman narrative.

Another View: What Does Our DCF Model Reveal?

While analyst price targets suggest Northrop Grumman is moderately undervalued, our SWS DCF model points in the opposite direction and indicates the shares might actually be priced above their fair value. Which approach better describes reality?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Northrop Grumman for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Northrop Grumman Narrative

If you want to take a different angle or weigh the numbers in your own way, you can build your perspective in just a few minutes with our tools. Do it your way

A great starting point for your Northrop Grumman research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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