NOC  Northrop Grumman Corporation

Exchange

NYSE

Sector

Capital Goods

Industry

Industrial Machinery/Components

Market Cap.

42.79B

Vuru Grade

47.73/100

Current Price

$245.05
+1.19 (+0.49%)

Growth Price

$101.29
Overvalued by 58.67%

Stability Price

$41.41
Overvalued by 83.10%

Company Metrics

  • P/E 20.1
  • P/S 1.74
  • P/B 8.12
  • EPS 12.19
  • Cash ROIC 12.14%
  • Cash Ratio 0.45
  • Dividend 3.6 / 1.48%
  • Avg. Vol. 1.09M
  • Shares 174.62M
  • Market Cap. 42.79B

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

Fly High With Profits from Northrop Grumman Corporation (NOC) Stock
Investorplace.com - Feb 15, 2017
Northrop Grumman Corporation (NYSE:NOC) has had an impressive ascending trend as shown in the weekly chart below. These are the types of stocks that I like to engage with longer-term trades.
Northrop Grumman Board Declares Quarterly Dividend - Nasdaq
The Northrop Grumman Corporation (NOC) to Issue Quarterly Dividend of $0.90 - DailyQuint
Northrop Grumman: Facing Challenges On Several Fronts
Seeking Alpha - Dec 16, 2016
Northrop Grumman is looking to reduce the scale of stock buybacks due to dwindling cash reserves and high long-term debt. It is running behind schedule and over budget in its "AOC 10.2" project which will hurt its profit margin.
Assessing Defense: Northrop Grumman
Seeking Alpha - Sep 5, 2016
The company can trace it's roots back to 1930 when Leroy Grumman, Jake Jake Swirbul, Bill Schwendler, E. Clint Towl and Ed Poor created Grumman Aeronautical Engineering. Northrop Aircraft Corporation was founded by John Northrop nine years later ...
3 Big Stock Charts for Wednesday: Northrop Grumman Corporation (NOC), Lockheed ...
Investorplace.com - Dec 28, 2016
With the market sitting near its highs, the last thing that traders usually expect to see are technical bargains on big name stocks, but they're out there.
Northrop Grumman Wins $17.1M Support Contract for MQ-8 - Nasdaq
Northrop Grumman Corporation (NOC) Ex-Dividend Date Scheduled for December 01 ...
Nasdaq - Nov 30, 2016
Northrop Grumman Corporation ( NOC ) will begin trading ex-dividend on December 01, 2016. A cash dividend payment of $0.9 per share is scheduled to be paid on December 21, 2016.
Northrop Grumman Prices $750 Million Debt Offering and Announces Debt Redemption - GlobeNewswire (press release)
What Wall Street is saying about Northrop Grumman Corporation (NYSE:NOC) - The Independent Republic
Option Trading: Northrop Grumman Corporation (NYSE:NOC) Powerful Short Put ...
CML News - 1 hour ago
We find a very powerful outcome examining short put spreads for Northrop Grumman Corporation when we use a clever earnings risk management approach.
Northrop Grumman Corporation (NYSE:NOC) EPS Forecast Given As $3.39 - Transcript Daily
The Northrop Grumman Corporation (NOC) Position Increased by Moody National ... - Petro Global News 24
Northrop Grumman: More Warning Signs
Seeking Alpha - Aug 18, 2016
For Q2, Northrop Grumman beat analyst estimates by a large $0.32 and raised full-year guidance again. The company now forecasts a 2016 EPS of $10.75 to $11.00, up from the original outlook of $9.90 to $10.20 when reporting Q4 numbers back in January.
Northrop Grumman And Its Future In Drones
Seeking Alpha - Oct 3, 2016
Companies like Northrop Grumman continue to show improvement every year, even if their progress is at times mitigated by bureaucratic bigwigs.
Northrop Grumman Delivers First CIRCM Systems to US Army - GlobeNewswire (press release)
Northrop Grumman Corporation (NOC) Moves Higher on Volume Spike for January 27
Equities.com - Jan 27, 2017
Northrop Grumman Corporation (NOC) traded on unusually high volume on Jan. 27, as the stock gained 1.26% to close at $229.83.
Northrop Grumman (NOC) Earnings and Revenues Top in Q4 - Yahoo Finance
Northrop Grumman profits up 10.6% in 2016 - IHS Jane's 360
Northrop Grumman Elects Mark A. Welsh III to its Board of Directors
GlobeNewswire (press release) - Dec 8, 2016
FALLS CHURCH, Va., Dec. 08, 2016 (GLOBE NEWSWIRE) -- Northrop Grumman Corporation (NYSE:NOC) announced it has elected Gen. Mark A. Welsh, III (USAF ret.
Here's Why Northrop Grumman Shares Moved Lower With Lockheed Martin - Benzinga
Out of Cash, Northrop Calls a Halt to Stock Buybacks - Motley Fool
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.

$245.05 Current Price

$101.29 Growth Price (DCF)

Overvalued by 58.67%


Growth Rate Assumed by Market: 27.39%


Future Free Cash Flow Growth Rate: 0.5%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$41.41 Stability Price (EPV)

Overvalued by 83.10%


Discount Rate: 15.0%

$79.55 Book Price

Overvalued by 67.54%


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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