Northrop Grumman Corp /De/ (NYSE: NOC)

Sector: Industrials Industry: Aerospace & Defense CIK: 0001133421
Market Cap 101.77 Bn
P/B 6.10
P/E 24.33
P/S 2.43
ROIC (Qtr) 10.53
Div Yield % 1.27
Rev 1y % (Qtr) 9.60
Total Debt (Qtr) 17.02 Bn
Debt/Equity (Qtr) 1.02

About

Price action

Investment thesis

Bull case

  • Operating cash flow of 4.76B provides strong 39.97x coverage of stock compensation 119M, indicating sustainable incentive practices.
  • Robust free cash flow of 3.31B exceeds capital expenditure of 1.45B by 2.28x, indicating strong organic growth funding capability.
  • Tangible assets of 33.94B provide exceptional 8.31x coverage of deferred revenue 4.09B, showing strong service capability backing.
  • Robust tangible asset base of 33.94B provides 24.16x coverage of working capital 1.41B, indicating strong operational backing.
  • Cash reserves of 4.40B provide ample 13.22x coverage of acquisition spending 333M, enabling strategic growth opportunities.

Bear case

  • Operating cash flow of 4.76B barely covers its investment activities of (1.16B), with a coverage ratio of -4.12, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 4.76B provides thin coverage of dividend payments of (1.29B) with a -3.68 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating cash flow of 4.76B provides insufficient coverage of deferred revenue obligations of 4.09B, which is 1.16x, raising concerns about future service delivery capabilities.
  • High receivables of 7.92B relative to inventory of 1.31B (6.05 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of 3.31B represents just -6.59x of debt issuance (502M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Aerospace & Defense
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GE General Electric Co 340.73 Bn 39.15 7.43 20.49 Bn
2 RTX RTX Corp 266.41 Bn 39.57 3.01 39.51 Bn
3 BA Boeing Co 184.47 Bn 97.60 2.06 54.10 Bn
4 LMT Lockheed Martin Corp 145.11 Bn 28.92 1.93 21.70 Bn
5 HWM Howmet Aerospace Inc. 107.72 Bn 167.79 15.89 3.19 Bn
6 GD General Dynamics Corp 104.16 Bn 30.88 2.67 8.01 Bn
7 NOC Northrop Grumman Corp /De/ 101.77 Bn 24.33 2.43 17.02 Bn
8 TDG TransDigm Group INC 74.73 Bn 41.34 8.20 30.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.27 3.14
EV to Cash from Ops. EV/CFO 24.55 76.41
EV to Debt EV to Debt 6.86 80.89
EV to EBIT EV/EBIT 20.37 11.31
EV to EBITDA EV/EBITDA 20.30 30.07
EV to Free Cash Flow [EV/FCF] EV/FCF 35.31 86.36
EV to Market Cap EV to Market Cap 1.15 1.07
EV to Revenue EV/Rev 2.78 10.58
Price to Book Value [P/B] P/B 6.10 5.81
Price to Earnings [P/E] P/E 24.33 18.35
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.23 -3.22
Dividend Payout Ratio % Div Payout % (Qtr) 30.90 19.41
Dividend per Basic Share Div per Share (Qtr) 8.99 0.73
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 39.01 11.64
Interest Coverage Int. cover (Qtr) 8.62 -13.61
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 17.94 -65.17
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 1.15 1,593.29
Dividend Growth (1y) % Div 1y % (Qtr) 11.68 1.86
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 0.85 -43.11
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 0.21 19.42
EBIT Growth (1y) % EBIT 1y % (Qtr) 1.70 -34.51
EBT Growth (1y) % EBT 1y % (Qtr) 1.04 -35.59
EPS Growth (1y) % EPS 1y % (Qtr) 2.64 -112.67
FCF Growth (1y) % FCF 1y % (Qtr) 26.17 27.64
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -0.59 -0.19
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.82 0.51
Cash Payout Ratio Cash Payout (Qtr) 0.21 0.03
Cash Ratio Cash Ratio (Qtr) 0.32 1.78
Current Ratio Curr Ratio (Qtr) 1.10 3.63
Debt to Equity Ratio Debt/Equity (Qtr) 1.02 0.29
Interest Cover Ratio Int Coverage (Qtr) 8.62 -13.61
Times Interest Earned Times Interest Earned (Qtr) 8.62 -13.61
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 17.20 -345.58
EBIT Margin % EBIT Margin % (Qtr) 13.66 -382.34
EBT Margin % EBT Margin % (Qtr) 12.08 -387.64
Gross Margin % Gross Margin % (Qtr) 19.80 -33.21
Net Profit Margin % Net Margin % (Qtr) 10.00 -388.96