NYSE:NOC

Stock Analysis Report

Executive Summary

Northrop Grumman Corporation operates as a security company.

Rewards

Trading at 5.2% below its fair value

Earnings are forecast to grow 14.81% per year

Pays a reliable dividend of 1.42%

Risk Analysis

Has a high level of debt

Profit margins (6.6%) are lower than last year (10.7%)



Snowflake Analysis

Average dividend payer with moderate growth potential.


Similar Companies

Lockheed Martin

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Share Price & News

How has Northrop Grumman's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: NOC has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

2.6%

NOC

-0.006%

US Aerospace & Defense

1.8%

US Market


1 Year Return

29.3%

NOC

25.8%

US Aerospace & Defense

20.1%

US Market

Return vs Industry: NOC exceeded the US Aerospace & Defense industry which returned 25.8% over the past year.

Return vs Market: NOC exceeded the US Market which returned 20.1% over the past year.


Shareholder returns

NOCIndustryMarket
7 Day2.6%-0.006%1.8%
30 Day-3.3%1.8%1.4%
90 Day4.0%6.0%8.8%
1 Year31.3%29.3%28.1%25.8%22.7%20.1%
3 Year59.4%52.3%54.6%46.4%50.1%40.4%
5 Year133.5%115.4%92.0%73.7%72.9%53.9%

Price Volatility Vs. Market

How volatile is Northrop Grumman's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Northrop Grumman undervalued compared to its fair value and its price relative to the market?

5.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: NOC ($370.94) is trading below our estimate of fair value ($391.26)

Significantly Below Fair Value: NOC is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: NOC is poor value based on its PE Ratio (27.9x) compared to the Aerospace & Defense industry average (20.7x).

PE vs Market: NOC is poor value based on its PE Ratio (27.9x) compared to the US market (18.3x).


Price to Earnings Growth Ratio

PEG Ratio: NOC is poor value based on its PEG Ratio (1.9x)


Price to Book Ratio

PB vs Industry: NOC is overvalued based on its PB Ratio (7.1x) compared to the US Aerospace & Defense industry average (2.8x).


Next Steps

Future Growth

How is Northrop Grumman forecast to perform in the next 1 to 3 years based on estimates from 17 analysts?

14.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: NOC's forecast earnings growth (14.8% per year) is above the savings rate (1.7%).

Earnings vs Market: NOC's earnings (14.8% per year) are forecast to grow faster than the US market (14.3% per year).

High Growth Earnings: NOC's earnings are forecast to grow, but not significantly.

Revenue vs Market: NOC's revenue (5.5% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: NOC's revenue (5.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: NOC's Return on Equity is forecast to be high in 3 years time (34.6%)


Next Steps

  • Explore growth companies in the Capital Goods industry.

Past Performance

How has Northrop Grumman performed over the past 5 years?

11.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: NOC has high quality earnings.

Growing Profit Margin: NOC's current net profit margins (6.6%) are lower than last year (10.7%).


Past Earnings Growth Analysis

Earnings Trend: NOC's earnings have grown by 11.5% per year over the past 5 years.

Accelerating Growth: NOC's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: NOC had negative earnings growth (-30.4%) over the past year, making it difficult to compare to the Aerospace & Defense industry average (10.8%).


Return on Equity

High ROE: Whilst NOC's Return on Equity (25.49%) is high, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Northrop Grumman's financial position?


Financial Position Analysis

Short Term Liabilities: NOC's short term assets ($10.7B) exceed its short term liabilities ($9.4B).

Long Term Liabilities: NOC's short term assets ($10.7B) do not cover its long term liabilities ($22.8B).


Debt to Equity History and Analysis

Debt Level: NOC's debt to equity ratio (157.4%) is considered high.

Reducing Debt: NOC's debt to equity ratio has increased from 82.1% to 157.4% over the past 5 years.

Debt Coverage: NOC's debt is well covered by operating cash flow (31%).

Interest Coverage: NOC's interest payments on its debt are well covered by EBIT (5.6x coverage).


Balance Sheet

Inventory Level: NOC has a high level of physical assets or inventory.

Debt Coverage by Assets: NOC's debt is not covered by short term assets (assets are 0.8x debt).


Next Steps

Dividend

What is Northrop Grumman's current dividend yield, its reliability and sustainability?

1.42%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Northrop Grumman before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company1.4%marketbottom25%1.4%markettop25%3.7%industryaverage1.7%forecastin3Years1.7%

Current dividend yield vs market & industry

Notable Dividend: NOC's dividend (1.42%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.44%).

High Dividend: NOC's dividend (1.42%) is low compared to the top 25% of dividend payers in the US market (3.68%).


Stability and Growth of Payments

Stable Dividend: NOC's dividends per share have been stable in the past 10 years.

Growing Dividend: NOC's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (38.9%), NOC's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: NOC's dividends in 3 years are forecast to be well covered by earnings (23.4% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

5.0yrs

Average management tenure


CEO

Kathy Warden (47yo)

1.1yrs

Tenure

US$13,342,307

Compensation

Ms. Kathy J. Warden has been President of Northrop Grumman Corporation since January 1, 2018, Chief Executive Officer since January 1, 2019 and Chairman of the Board August 1, 2019. Ms. Warden served as th ...


CEO Compensation Analysis

Compensation vs Market: Kathy's total compensation ($USD13.34M) is about average for companies of similar size in the US market ($USD10.82M).

Compensation vs Earnings: Kathy's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Kathy Warden
Chairman1.1yrsUS$13.34m0.055% $34.5m
Kenneth Bedingfield
Corporate VP & CFO5yrsUS$5.92m0.021% $13.1m
Mark Caylor
Corporate VP & President of Mission Systems Sector2.1yrsUS$6.15m0.0095% $5.9m
Blake Larson
Corporate VP & President of Space Systems Sector0yrsUS$8.09m0.0042% $2.6m
Rajender Chandhok
Vice President of Trust Administration and Investments16.8yrsno datano data
Michael Hardesty
Corporate VP7yrsno data0.0029% $1.8m
Todd Ernst
Vice President of Investor Relations0.5yrsno datano data
Sheila Cheston
Corporate VP & General Counsel9.5yrsUS$6.20m0.021% $12.9m
Carl Hahn
Chief Compliance Officer & VP5.1yrsno datano data
Lucy Ryan
Corporate Vice President of Communications1.1yrsno datano data

5.0yrs

Average Tenure

50.5yo

Average Age

Experienced Management: NOC's management team is seasoned and experienced (5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Kathy Warden
Chairman1.1yrsUS$13.34m0.055% $34.5m
Kathleen Thomas
Chairman of the Learning & Development Council and Vice President of Learning & Development0yrsno datano data
Karl Krapek
Independent Director11.4yrsUS$310.56k0.0029% $1.8m
Donald Felsinger
Lead Independent Director7.8yrsUS$352.18kno data
William Hernandez
Independent Director6.4yrsUS$321.40k0.00060% $373.1k
Thomas Schoewe
Independent Director8.5yrsUS$295.99k0.0019% $1.2m
Bruce Gordon
Independent Director11.3yrsUS$323.33kno data
Madeleine Kleiner
Independent Director11.3yrsUS$328.18kno data
James Stavridis
Chair of International Advisory Board0yrsno datano data
Warren King
Chairman of Northrop Grumman Australia Advisory Board2yrsno datano data

8.1yrs

Average Tenure

68.5yo

Average Age

Experienced Board: NOC's board of directors are considered experienced (8.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: NOC insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Northrop Grumman Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Northrop Grumman Corporation
  • Ticker: NOC
  • Exchange: NYSE
  • Founded: 1939
  • Industry: Aerospace and Defense
  • Sector: Capital Goods
  • Market Cap: US$62.183b
  • Shares outstanding: 167.64m
  • Website: https://www.northropgrumman.com

Number of Employees


Location

  • Northrop Grumman Corporation
  • 2980 Fairview Park Drive
  • Falls Church
  • Virginia
  • 22042
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
NOCNYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1968
NTHDB (Deutsche Boerse AG)YesCommon StockDEEURJan 1968
NTHXTRA (XETRA Trading Platform)YesCommon StockDEEURJan 1968
0K92LSE (London Stock Exchange)YesCommon StockGBUSDJan 1968
NOC *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJan 1968
NTHETLX (Eurotlx)YesCommon StockITEURJan 1968
NOCOWBAG (Wiener Boerse AG)YesCommon StockATEURJan 1968
NOCG34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 1 REP 0.2 COM USD1BRBRLMay 2019

Biography

Northrop Grumman Corporation operates as a security company. It provides various systems, products, and solutions in autonomous systems, cyber, space, strike, and logistics and modernization, as well as in command, control, communications and computers, intelligence, surveillance, and reconnaissance (C4ISR) to customers in the United States and internationally. The company operates through Aeronautics Systems, Defense Systems, Mission Systems, and Space Systems segments. It designs, develops, integrates, and produces manned aircrafts, autonomous systems, spacecraft systems, high-energy laser systems, microelectronics, and other systems and sub-systems for use in the areas of intelligence, surveillance and reconnaissance, strike operations, communications, earth observations, and space science. The company also designs, develops, integrates, and produces flights, armaments, and space systems to enable national security, civil government, and commercial customers in achieving their critical missions. Its space systems include launch vehicles and related propulsion systems; missile products and defense electronics; precision weapons, armament systems and ammunition; satellites and associated space components and services; and aerospace structures. In addition, it offers C4ISR systems; radar, electro-optical/infrared, and acoustic sensors; electronic warfare systems; cyber solutions; space and intelligence processing systems; air and missile defense integration systems; navigation systems; and shipboard missiles and encapsulated payload launch systems. Further, the company provides life-cycle solutions and services in support of networks and systems, including sustainment, modernization, training and simulation, software, engineering services, cyber, rapidly-deployable global logistics, and information technology. The company was founded in 1939 and is based in Falls Church, Virginia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/15 23:51
End of Day Share Price2020/02/14 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.