NOC
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XBRL · SEC EDGAR2007–2025(19yr)| Metric | FY 2007 | FY 2008 | FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025Latest | YoY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $30.3B | $32.3B | $33.8B | $34.8B | $26.4B | $25.2B | $24.7B | $24.0B | $23.5B | $24.7B | $26.0B | $30.1B | $33.8B | $36.8B | $35.7B | $36.6B | $39.3B | $41.0B | $42.0B | +2.2% |
| Gross Profit | $16.0B | $16.8B | $17.2B | $17.9B | $14.9B | $14.8B | $14.0B | $13.5B | $13.2B | $13.7B | $13.7B | — | — | — | — | — | — | — | — | — |
| Gross Margin | 52.7% | 52.1% | 50.8% | 51.6% | 56.5% | 58.7% | 56.9% | 56.5% | 56.1% | 55.5% | 52.8% | — | — | — | — | — | — | — | — | — |
| Operating Income | $2.9B | -$263.0M | $2.5B | $3.1B | $3.3B | $3.1B | $3.1B | $3.2B | $3.1B | $3.2B | $3.3B | $3.8B | $4.0B | $4.1B | $5.7B | $3.6B | $2.5B | $4.4B | $4.5B | +3.2% |
| Operating Margin | 9.6% | -0.8% | 7.4% | 8.8% | 12.4% | 12.4% | 12.7% | 13.3% | 13.1% | 12.9% | 12.7% | 12.6% | 11.7% | 11.0% | 15.8% | 9.8% | 6.5% | 10.6% | 10.8% | +0.1pp |
| Net Income | $1.8B | -$1.3B | $1.7B | $2.1B | $2.1B | $2.0B | $2.0B | $2.1B | $2.0B | $2.2B | $2.0B | $3.2B | $2.2B | $3.2B | $7.0B | $4.9B | $2.1B | $4.2B | $4.2B | +0.2% |
| Net Margin | 5.9% | -3.9% | 5.0% | 5.9% | 8.0% | 7.8% | 7.9% | 8.6% | 8.5% | 8.9% | 7.7% | 10.7% | 6.6% | 8.7% | 19.6% | 13.4% | 5.2% | 10.2% | 10.0% | -0.2pp |
| Free Cash Flow | $2.2B | $2.5B | $1.5B | $1.7B | $1.6B | $2.3B | $2.1B | $2.0B | $1.7B | $1.9B | $1.7B | $2.6B | $3.0B | $2.9B | $2.2B | $1.5B | $2.1B | $2.6B | $3.3B | +26.2% |
| FCF Margin | 7.3% | 7.8% | 4.4% | 4.8% | 6.2% | 9.2% | 8.6% | 8.5% | 7.2% | 7.7% | 6.5% | 8.6% | 9.0% | 7.8% | 6.0% | 4.0% | 5.3% | 6.4% | 7.9% | +1.5pp |
| EPS (Diluted) | $5.12 | $-3.77 | $5.21 | $6.82 | $7.52 | $7.81 | $8.35 | $9.75 | $10.39 | $12.19 | $11.47 | $18.49 | $13.22 | $19.03 | $43.54 | $31.47 | $13.53 | $28.34 | $29.08 | +2.6% |
1. THE BIG PICTURE
Northrop Grumman is currently a story of massive scale and record demand clashing with structural capital inefficiency. While Northrop Grumman holds a central role in the U.S. nuclear triad and stealth aviation, its inability to convert its $95.7 billion backlog into peer-leading cash flow creates a firm valuation ceiling.
2. WHERE THE RISKS HIT HARDEST
Northrop Grumman’s technological breadth in advanced systems like the B-21 Raider is directly threatened by its fixed-price contract exposure. Because approximately half of 2025 sales are under fixed-price terms, any technical hurdle or inflationary pressure in these complex development programs erodes the bottom line without the possibility of cost recovery (10-K Item 1A). Furthermore, Northrop Grumman's workforce expertise—specifically its pool of personnel with security clearances—is a double-edged sword. This talent is a key differentiator, but because the U.S. government accounts for 84% of sales, this specialized workforce represents a high-cost overhead that cannot be easily redeployed if federal budget priorities shift or a government shutdown occurs (10-K Item 1).
3. WHAT THE NUMBERS SAY TOGETHER
The financial data reveals a sharp divergence between top-line momentum and bottom-line efficiency. Revenue growth in the most recent quarter (+10%) significantly outpaced the trailing twelve-month (TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter) growth of +2.2%, driven by an 18% surge in Aeronautics Systems (8-K). This acceleration suggests that major programs like the B-21 are moving into higher-volume phases.
However, Northrop Grumman ranks last among its peers in Free Cash Flow (FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders) margin at just 2.0%, trailing significantly behind Lockheed Martin (8.7%) and Honeywell (13.4%). This suggests that while Northrop Grumman is winning the battle for record backlogs, it is struggling to turn those wins into liquid cash, likely due to the high capital intensity of its current development portfolio. Sentiment remains stable, as evidenced by a low short interest of 1.3% of the float (Yahoo Finance).
4. IS IT WORTH IT AT THIS PRICE?
At 24.5x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, Northrop Grumman is priced exactly in line with the peer median. According to the provided analysis, the market is pricing in a 0.5% long-term growth rate. This appears conservative given Northrop Grumman’s 1.10 book-to-bill ratio and recent double-digit quarterly sales growth.
However, the valuation is weighed down by a net leverage ratio of 17.1x (Net Debt to FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders), which is a significant outlier compared to the broader peer group. For the current price to be "right," Northrop Grumman must prove it can move past the heavy investment phase of programs like the B-21 and Sentinel. If long-term growth were to align with standard GDP levels of 2.5%, the justified multiple would rise toward 49.1x, but the current FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders conversion (6th of 6 peers) justifies the market's cautious "fair value" assessment.
5. WHAT WOULD CHANGE THIS VIEW?
- Constructive if FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin moves toward the peer median of ~8%, signaling that the Sentinel program restructure or B-21 production has transitioned into a more profitable, cash-generative phase.
- Cautious if the ongoing restructure of the Sentinel program results in a new program baseline that requires significant additional capital expenditure or further delays (10-Q).
6. BOTTOM LINE
Structural Advantage: Dominant position in the U.S. nuclear triad and stealth aviation, protected by a $95.7 billion record backlog and a specialized, security-cleared workforce.
Bottom Line: Northrop Grumman is a vital national asset currently priced for stagnation, offering a potential value play only if it can bridge the gap between its record orders and its peer-lagging cash conversion.
1. Top 5 Material Risks
- U.S. Government Dependency: Northrop Grumman derived 84 percent of its sales from the U.S. government in 2025. Changes in defense strategy, budget appropriations, or a prolonged government shutdown could lead to contract cancellations, stop-work orders, or payment delays.
- Contract Accounting Estimates: Profitability depends on complex estimates of total revenues and costs at completion. If estimated costs increase—due to inflation, supply chain challenges, or technical issues—without a corresponding revenue increase, operating income is adversely affected.
- Fixed-Price Contract Exposure: Approximately half of 2025 sales were derived from fixed-price contracts. These carry higher financial risk than cost-type contracts, particularly for development programs where cost variability is high and Northrop Grumman may be unable to recover cost overruns.
- Competitive Dynamics: Increased competition from new market entrants, commercial contractors, and firms utilizing non-Federal Acquisition Regulation-based procurement (such as Other Transaction Authority agreements) creates pricing pressure and may force Northrop Grumman to accept less favorable contract terms.
- Goodwill and Asset Impairment: Goodwill accounts for 34 percent of total assets as of December 31, 2025. Changes in business conditions or assumptions regarding the recoverability of long-lived assets could result in significant write-offs.
2. Company-Specific Risks
- Nunn-McCurdy Act Exposure: Certain programs are subject to the Nunn-McCurdy Act, which requires congressional notification if cost thresholds are exceeded. Failure to achieve certification for program continuance could result in restructuring or termination.
- Hazardous Operations: Northrop Grumman handles energetic materials, propulsion systems, and nuclear-related operations. These activities carry risks of explosions, environmental harm, and personal injury that may not be fully covered by insurance or government indemnification.
- Space Insurance Volatility: The space insurance market is experiencing price volatility and capacity constraints. If space missions are partially or wholly uninsured, Northrop Grumman bears the financial loss of mission failures.
- Pension and Postretirement Obligations: Funding requirements and expenses for pension and other postretirement benefit (OPB) plans are sensitive to investment performance, discount rates, and mortality assumptions, which can fluctuate significantly.
3. Regulatory/Legal Risks
- Procurement Compliance: Northrop Grumman is subject to routine audits by the DCAA, DCMA, and the DoW Inspector General. Costs deemed unallowable or improperly allocated are not reimbursed, and findings of noncompliance can lead to civil or criminal penalties, suspension, or debarment.
- Environmental Remediation: Northrop Grumman incurs substantial costs related to the cleanup of pollutants. Stricter remediation standards or the discovery of new contaminants could require material additional expenditures.
- Cybersecurity Disclosure: Northrop Grumman faces evolving disclosure obligations regarding cyber incidents. Failure to meet these requirements or the misinterpretation of disclosures poses regulatory and reputational risk.
- Export/Import Controls: Northrop Grumman is subject to strict export/import regulations. Loss of export privileges—whether due to compliance failures or government action—could have a material adverse effect on Northrop Grumman’s ability to conduct international business.
4. Financial Impact Map
U.S. Government Dependency → Sales → 84 percent of 2025 sales derived from this single customer. Contract Accounting Estimates → Operating Income → Adversely affected when estimated contract costs increase without comparable revenue increases. Fixed-Price Contract Exposure → Profitability/Net Income → Approximately 50 percent of 2025 sales are subject to higher financial risk from cost variability. Goodwill Impairment → Total Assets → Goodwill represents 34 percent of total assets as of December 31, 2025. Pension and OPB Obligations → Financial Position/Results of Operations → Fluctuations in plan asset performance and actuarial assumptions can materially impact financial results.
Recent Filings
| Form | Filed | Period |
|---|---|---|
| 8-K | Jan 2026 | — |
| 10-K | Jan 2026 | Dec 2025 |
| 10-Q | Oct 2025 | Sep 2025 |
| 14A | Apr 2025 | — |
AI-extracted key facts from press releases and SEC filings. Significance 1–10.
Northrop Grumman Q1 EPS $6.06 misses estimates, FY25 guidance cut to $24.95–$25.35
- ▸Q1 EPS $6.06 missed analyst estimates of $6.26
- ▸FY25 EPS guidance cut to $24.95–$25.35 from $27.85–$28.25
- ▸B-21 stealth bomber program losses cited as primary driver for guidance reduction
- ▸Shares closed 12.7% lower on April 22, 2025, following earnings release
- ▸Company remains a primary defense contractor for aircraft, radar, and missile systems
Northrop Grumman Secures Prime Contractor Role in $185B Golden Dome Antimissile Shield Program
- ▸Secured prime contractor role in $185B Golden Dome antimissile shield program
- ▸Completed successful Talon IQ flight test using Shield AI Hivemind software
- ▸Projected 2028 financials: $47.5B revenue and $4.4B earnings
- ▸Targeting 5.5% annual revenue growth through 2028
- ▸Current fair value estimates range from $516 to $724 per share
Modiv Industrial FY25 AFFO $17.2M, up 15% YoY; Q4 Net Income $0.4M
- ▸Full year 2025 AFFO $17.2M, up 15% YoY
- ▸Full year 2025 net loss $2.1M, or $(0.31) per diluted share
- ▸Q4 2025 net income $0.4M; Q4 AFFO $4.0M
- ▸Completed $26.0M sale of Issaquah, WA property; repaid $18.3M mortgage
- ▸Under contract to sell Melbourne, FL property leased to Northrop Grumman
Northrop Grumman Q4 Revenue $11.71B +9.6% YoY, Beats Estimates by 0.7%
- ▸Northrop Grumman Q4 revenue $11.71B, +9.6% YoY, beat estimates by 0.7%
- ▸Northrop Grumman full-year EPS guidance missed analyst expectations significantly
- ▸Leonardo DRS Q4 revenue $1.06B, +8.1% YoY, beat estimates by 7%
- ▸AeroVironment Q4 revenue $408M, +143% YoY, missed estimates by 14.6%
- ▸Defense sector Q4 revenues beat consensus estimates by 2.1% collectively
Northrop Grumman reports record $95.7B backlog, shares up 29% YTD in 2026
- ▸Record $95.7 billion defense and aerospace backlog
- ▸Shares up 29.07% year-to-date to approximately $735
- ▸Q4 earnings beat expectations
- ▸Strong performance driven by core defense program execution
- ▸One major program remains in limbo per management commentary
Northrop Grumman Secures B-21 Acceleration Contract, Potential Upside to 2026 Guidance
- ▸B-21 acceleration agreement signed with Air Force, providing unpriced 2026-2028 upside
- ▸Q4 2025 revenue $11.7B, +10% YoY
- ▸Record backlog of $95.7B
- ▸FY26 guidance: $43.5B–$44B sales, $3.1B–$3.5B free cash flow
- ▸Sentinel ICBM program facing schedule delays and restructuring following cost breach
Northrop Grumman Price Targets Raised by Multiple Firms; China Imposes Sanctions on Defense Contractors
- ▸Citi and Bernstein raised price targets to $715 and $727 respectively
- ▸China imposed sanctions on NOC, freezing assets and barring 10 executives
- ▸Repurchased 809,989 shares for $465.87M under December 2024 buyback program
- ▸Awarded U.S. Marine Corps MUX TACAIR Collaborative Combat Aircraft program
- ▸Repurchased 794,897 shares for $457.11M between Sept 27 and Dec 31, 2025