Northrop Grumman Corporation
Northrop Grumman Corporation Fundamental Analysis
Northrop Grumman Corporation (NOC) shows moderate financial fundamentals with a PE ratio of 17.79, profit margin of 10.80%, and ROE of 28.05%. The company generates $42.3B in annual revenue with weak year-over-year growth of 2.24%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 61.1/100 based on profitability, valuation, growth, and balance sheet metrics. The C+ grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze NOC's fundamental strength across five key dimensions:
Efficiency Score
WeakNOC struggles to generate sufficient returns from assets.
Valuation Score
ExcellentNOC trades at attractive valuation levels.
Growth Score
WeakNOC faces weak or negative growth trends.
Financial Health Score
ExcellentNOC maintains a strong and stable balance sheet.
Profitability Score
ModerateNOC maintains healthy but balanced margins.
Key Financial Metrics
Is NOC Expensive or Cheap?
P/E Ratio
NOC trades at 17.79 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, NOC's PEG of 0.68 indicates potential undervaluation.
Price to Book
The market values Northrop Grumman Corporation at 4.76 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 8.86 times EBITDA. This is generally considered low.
How Well Does NOC Make Money?
Net Profit Margin
For every $100 in sales, Northrop Grumman Corporation keeps $10.80 as profit after all expenses.
Operating Margin
Core operations generate 11.08 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $28.05 in profit for every $100 of shareholder equity.
ROA
Northrop Grumman Corporation generates $9.15 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Northrop Grumman Corporation produces operating cash flow of $4.66B, showing steady but balanced cash generation.
Free Cash Flow
Northrop Grumman Corporation produces free cash flow of $3.30B, offering steady but limited capital for shareholder returns and expansion.
FCF Per Share
Each share generates $23.26 in free cash annually.
FCF Yield
NOC converts 4.05% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
17.79
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.68
vs 25 benchmark
P/B Ratio
Price to book value ratio
4.76
vs 25 benchmark
P/S Ratio
Price to sales ratio
1.92
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.00
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.15
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.28
vs 25 benchmark
ROA
Return on assets percentage
0.09
vs 25 benchmark
ROCE
Return on capital employed
0.13
vs 25 benchmark
How NOC Stacks Against Its Sector Peers
| Metric | NOC Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 17.79 | 26.45 | Better (Cheaper) |
| ROE | 28.05% | 1289.00% | Weak |
| Net Margin | 10.80% | -41634.00% (disorted) | Strong |
| Debt/Equity | 1.00 | 0.71 | Weak (High Leverage) |
| Current Ratio | 1.15 | 10.09 | Neutral |
| ROA | 9.15% | -1505238.00% (disorted) | Weak |
NOC outperforms its industry in 2 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Northrop Grumman Corporation's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
32.76%
Industry Style: Cyclical, Value, Infrastructure
High GrowthEPS CAGR
52.71%
Industry Style: Cyclical, Value, Infrastructure
High GrowthFCF CAGR
28.67%
Industry Style: Cyclical, Value, Infrastructure
High Growth