Attractive PE Ratio
Favorable Price-to-Sales Ratio
Strong Return on Equity
Healthy Profit Margins
Low Debt Levels
Strong Interest Coverage
🌟 Strong Backlog
💰 Strong Financial Performance
🔧 Technological Differentiation
📈 International Growth Potential
🚀 Focus on Innovation
🔮 Continued Margin Expansion
High Price-to-Cash-Flow Ratio
Moderate Operating Profit Margin
Low Cash Ratio
Overall, Northrop Grumman demonstrates high business quality through strong financial performance, a robust backlog, and unique technological capabilities. Future prospects appear positive, with expected growth driven by international opportunities and continued innovation.
Analysis Date: January 30, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$1101.43
Current Market Price: $481.71
IV/P Ratio: 2.29x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
56.00000000000001%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for NOC
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (16.97)
P/B ratio ≤ 1.5 (4.63)
Current ratio ≥ 2.0 (1.01x)
Long-term debt < Net current assets (12.32x)
Margin of safety (56.00000000000001%)
NOC does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
A return on equity (ROE) of 28.51% indicates effective management in generating profits from shareholders' equity, showcasing strong profitability.
The net profit margin of 10.17% reflects NOC's ability to convert revenue into actual profit, indicating solid operational efficiency.
The operating profit margin of 10.90% is decent but could be improved; it indicates the company has room to enhance operational efficiency.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
28.51%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
2.56%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
20.38%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
10.17%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
The debt-to-equity ratio of 0.12 signifies a conservative approach to leverage, indicating lower financial risk and greater stability.
An interest coverage ratio of 7.20 shows that NOC comfortably covers its interest obligations, indicating strong financial health.
A cash ratio of 0.31 indicates that the company may have limited liquidity to cover short-term liabilities, which could pose a risk in financial distress situations.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.12x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.01x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Northrop Grumman reported a record backlog of approximately $91.5 billion, reflecting strong demand for its capabilities and a book-to-bill ratio of 1.23 times. This indicates a solid foundation for future growth driven by competitive wins and follow-on awards.
The company's top line grew by over 4% in 2024, with a significant focus on efficiency leading to margin expansion. Free cash flow performance was outstanding, increasing 25% year-over-year to over $2.6 billion.
Northrop Grumman’s strategic focus on technology differentiation has positioned it well in national security markets. The company has advanced capabilities in microelectronics and AI, which are crucial for defense applications.
Northrop Grumman expects its international business to grow faster than U.S. sales in 2025, supported by a strong book-to-bill ratio of 1.4 times for international contracts. This indicates strong demand in global defense markets.
The company is investing heavily in advanced manufacturing techniques and digital ecosystems, which will enhance production capabilities and lead to faster fielding of new systems. This positions Northrop Grumman favorably for future technological advancements.
The guidance for 2025 includes expectations for continued organic growth of 3% to 4% and further segment margin expansion, indicating a strong outlook for profitability.