NOC  Northrop Grumman Corporation

Exchange

NYSE

Sector

Capital Goods

Industry

Industrial Machinery/Components

Market Cap.

51.45B

Vuru Grade

47.73/100

Current Price

$295.53
-0.84 (-0.28%)

Growth Price

$101.59
Overvalued by 65.62%

Stability Price

$41.53
Overvalued by 85.95%

Company Metrics

  • P/E 22.58
  • P/S 2.05
  • P/B 8.72
  • EPS 13.09
  • Cash ROIC 12.14%
  • Cash Ratio 0.45
  • Dividend 4 / 1.35%
  • Avg. Vol. 697,222.00
  • Shares 174.09M
  • Market Cap. 51.45B

Company Description

Northrop Grumman Corporation provides products, services, and solutions in aerospace, electronics, information systems, shipbuilding, and technical service sectors. Its company's Aerospace Systems segment offers manned and unmanned aircraft, spacecraft, high-energy laser systems, microelectronics, and other systems and subsystems in the areas of intelligence, surveillance, and reconnaissance; comm... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

After 3rd Quarter Earnings, Is Northrop Grumman A Buy?
Seeking Alpha - Nov 7, 2017
On 9/18/2017, Northrop Grumman agreed to purchase Orbital ATK (OA). NOC is paying more than $9 billion for Orbital ATK. The company issued debt to fund this purchase. OA is the largest supplier of ammunition to the U.S. government as well as has ...
Northrop Grumman Corporation (NOC) Given Average Recommendation of “Buy” by ... - The Ledger Gazette
Northrop Grumman Screens Into the Unknown in South Korea to Inspire Future ... - WebWire (press release)
Northrop Grumman: When There Is Too Much Growth
Seeking Alpha - Oct 26, 2017
After writing articles on a few defense companies, a reader asked me to review Northrop Grumman (NYSE:NOC), another global security provider operating mainly in the U.S.
Northrop Grumman appoints Dong Ha as Chief Executive for South Korea - American Journal of Transportation
The Zacks Analyst Blog Highlights: Boeing, General Dynamics, Northrop Grumman ... - Nasdaq
Zacks Investment Research Downgrades Northrop Grumman Corporation (NYSE:NOC ...
The Ledger Gazette - 9 hours ago
Northrop Grumman Corporation (NYSE:NOC) was downgraded by Zacks Investment Research from a “buy” rating to a “hold” rating in a research report issued on Thursday, November 9th.
Westpac Banking Corp Sells 465 Shares of Northrop Grumman Corporation (NYSE:NOC) - Dispatch Tribunal
HM Payson & Co. Cuts Stake in Northrop Grumman Corporation (NYSE:NOC) - StockNewsTimes
Northrop Grumman to Participate in Baird 2017 Global Industrial Conference
GlobeNewswire (press release) - Nov 1, 2017
FALLS CHURCH, Va., Nov. 01, 2017 (GLOBE NEWSWIRE) -- Northrop Grumman Corporation (NYSE:NOC) will participate in the Baird 2017 Global Industrial Conference Wednesday, Nov. 8. Ken Bedingfield, corporate vice president and chief financial officer ...
Investors Buy Shares of Northrop Grumman Corporation (NOC) on Weakness After ... - The Ledger Gazette
Northrop Grumman's Newest Mission Computer Fielded by US Marine Corps for H-1 ... - WebWire (press release)
Northrop Grumman to Participate in Goldman Sachs Industrials Conference 2017
GlobeNewswire (press release) - Nov 7, 2017
FALLS CHURCH, Va., Nov. 10, 2017 (GLOBE NEWSWIRE) -- Northrop Grumman Corporation (NYSE:NOC) will participate in the Goldman Sachs Industrials Conference 2017 on Wednesday, Nov. 15.
Northrop Grumman Corporation (NOC) Rises 3.65% for October 25
Equities.com - Oct 25, 2017
Among the biggest risers on the S&P 500 on Wednesday October 25 was Northrop Grumman Corporation ($NOC), popping some 3.65% to a price of $304.75 a share with some 1.54 million shares trading hands.
Northrop Grumman Corporation (NOC) VP Sells $1489289.79 in Stock
The Ledger Gazette - Nov 20, 2017
Northrop Grumman Corporation logo Northrop Grumman Corporation (NYSE:NOC) VP Denise M. Peppard sold 5,037 shares of Northrop Grumman Corporation stock in a transaction that occurred on Wednesday, November 1st. The stock was sold at an ...
Northrop Grumman Corporation (NOC) Receiving Somewhat Positive Media Coverage ... - StockNewsTimes
Northrop Grumman Corporation (NYSE:NOC) Shares Bought by Boston Partners - Dispatch Tribunal
Top of the chart stocks in today's market : Northrop Grumman Corporation (NYSE ...
The News Journal - Nov 20, 2017
Based on the aggregate value of the company over its current share price and the total amount of outstanding stocks, the market cap of Northrop Grumman Corporation (NOC) is presently reeling at 52.32B. Acting as the blue chip in today's trade, Northrop ...
US Army Selects Northrop Grumman for Mission Training Capabilities Support ...
Defenseworld.net - 22 hours ago
The US Army has selected Northrop Grumman Corporation for its Mission Training Complex Capabilities Support contract. The contract is multiple award indefinite-delivery, indefinite-quantity, allowing Northrop Grumman to compete for more than $500 ...
Northrop Grumman (NOC) Beats Q3 Earnings, Raises '17 Outlook
Nasdaq - Oct 25, 2017
Northrop Grumman has raised its financial guidance for 2017. The company currently expects to generate revenues approximately $25.5 billion during 2017 compared with its earlier guidance of lower than $25 billion.
Company News For Oct 26, 2017 - Zacks.com
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for NOC to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate NOC's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$295.53 Current Price

$101.59 Growth Price (DCF)

Overvalued by 65.62%


Growth Rate Assumed by Market: 32.28%


Future Free Cash Flow Growth Rate: 0.5%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$41.53 Stability Price (EPV)

Overvalued by 85.95%


Discount Rate: 15.0%

$82.92 Book Price

Overvalued by 71.94%


Satisfactory Cash Return on Invested Capital over the past 5 years

NOC has somewhat efficiently invested its financial resources in buildings, projects, and equipment. If CROIC is inconsistent, it's likely NOC could be benefiting from a one-time event or has a mixed history of investing capital productively. Read the company's Annual Report to determine whether this can improve.

NOC has created $12.14 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 2.31B 2.12B 2.03B 1.69B 1.89B
divided by
Invested Capital 16.63B 15.42B 16.82B 16.68B 17.44B
Cash ROIC 13.89% 13.75% 12.08% 10.14% 10.85%

Excellent Return on Equity over the past 5 years

Over the past 5 years, NOC has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

NOC has generated $29.13 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 1.98B 1.95B 2.07B 1.99B 2.20B
divided by
Stockholders' Equity 9.51B 10.62B 7.24B 5.52B 5.26B
Return on Equity 20.79% 18.38% 28.60% 36.04% 41.83%

Excellent Business Performance over the past 10 years

NOC has been able to maintain profitability in good times and bad. This could mean NOC has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

NOC has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 2.21B 2.53B 1.48B 1.68B 1.63B 2.31B 2.12B 2.03B 1.69B 1.89B

Weak Balance Sheet

NOC's financial position is not ideal. The key is to check whether NOC is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 963.00M 1.50B 3.28B 3.70B 3.00B 3.86B 5.15B 3.86B 2.32B 2.54B
Current Assets 6.77B 7.19B 8.64B 9.90B 7.75B 8.39B 9.49B 8.18B 6.33B 6.86B
Total Assets 33.37B 30.20B 30.25B 31.42B 25.41B 26.54B 26.38B 26.57B 24.45B 25.61B
Current Liabilities 6.43B 7.42B 6.99B 8.39B 6.14B 6.06B 5.82B 5.89B 5.46B 5.63B
Total Liabilities 15.69B 18.28B 17.57B 17.86B 15.08B 17.03B 15.76B 19.34B 18.93B 20.36B
Stockholder' Equity 17.69B 11.92B 12.69B 13.56B 10.34B 9.51B 10.62B 7.24B 5.52B 5.26B
Current Ratio 1.05 0.97 1.24 1.18 1.26 1.39 1.63 1.39 1.16 1.22
TL-to-TA 0.47 0.61 0.58 0.57 0.59 0.64 0.60 0.73 0.77 0.79

Consistent Reinvestment of Profits over the past 10 years

NOC has consistently retained profits. This may put NOC in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, NOC can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 7.39B 5.59B 6.74B 8.25B 9.70B 11.14B 12.54B 12.39B 10.66B 10.63B
Retained Earnings Growth - -24.33% 20.52% 22.38% 17.63% 14.84% 12.57% -1.16% -13.97% -0.29%

Competitive Industry over the past 10 years

NOC is likely operating in an industry with medium to low barriers to entry. This may mean that NOC doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. If Gross Margins are at least satisfactory, it's likely that NOC invests heavily in R&D and Sales, General & Administrative expenses.

Only $6.26 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 1.79B -1.26B 1.69B 2.05B 2.12B 1.98B 1.95B 2.07B 1.99B 2.20B
divided by
Revenue 32.02B 33.89B 33.76B 34.76B 26.41B 25.22B 24.66B 23.98B 23.53B 24.51B
Net Profit Margin 5.59% -3.72% 4.99% 5.91% 8.02% 7.84% 7.92% 8.63% 8.46% 8.98%

Inconsistent Gross Profit Margins over the past 10 years

NOC has good gross profit margins, however inconsistency of these margins is a cause for concern. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$28.69 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 6.21B 6.19B 5.63B 6.15B 26.41B 5.58B 5.38B 5.60B 5.64B 5.78B
divided by
Revenue 32.02B 33.89B 33.76B 34.76B 26.41B 25.22B 24.66B 23.98B 23.53B 24.51B
Gross Margin 19.41% 18.26% 16.66% 17.69% 100.00% 22.13% 21.81% 23.36% 23.98% 23.57%

Medium Capital Intensity over the past 10 years

NOC has used a reasonable amount of their financial resources to invest in facilities and equipment required to produce its goods and services. This isn't perfect, but it shouldn't be an area of concern unless this number is strongly trending upwards.

29.51% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 685.00M 681.00M 654.00M 770.00M 488.00M 331.00M 364.00M 561.00M 471.00M 920.00M
divided by
Net Income 1.79B -1.26B 1.69B 2.05B 2.12B 1.98B 1.95B 2.07B 1.99B 2.20B
Capital Expenditure Ratio 38.27% -53.96% 38.79% 37.51% 23.04% 16.73% 18.65% 27.11% 23.67% 41.82%

Very Strong Dividend History over the past 10 years

NOC has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests NOC is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 504.00M 525.00M 539.00M 545.00M 543.00M 535.00M 545.00M 563.00M 603.00M 640.00M
divided by
Shares Outstanding 354.30M 334.50M 323.30M 301.10M 281.60M 253.40M 233.90M 212.10M 191.60M 180.50M
Dividend Paid Per Share 1.42 1.57 1.67 1.81 1.93 2.11 2.33 2.65 3.15 3.55
Price at Year End 62.93 36.21 47.93 56.06 57.99 66.76 113.93 150.76 190.08 232.58
Dividend Yield 2.26% 4.33% 3.48% 3.23% 3.33% 3.16% 2.05% 1.76% 1.66% 1.52%

Strong History of Stock Buybacks over the past 10 years

NOC has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 354.30M 334.50M 323.30M 301.10M 281.60M 253.40M 233.90M 212.10M 191.60M 180.50M
Stock Bought Back - 5.92% 3.46% 7.37% 6.92% 11.13% 8.34% 10.28% 10.70% 6.15%
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