NYSE:NOC
NORTHROP GRUMMAN CORP /DE/
A premier U.S. defense contractor delivering advanced aerospace systems, cybersecurity solutions, and space technologies to government and commercial clients worldwide.
Key Metrics
Investment Thesis
Bull Case
Investors should consider NOC as a defensive growth play within the industrial sector, backed by consistent revenue expansion from $36.60B in 2022 to $41.95B in 2025. The dual support of steady government contracts and growing commercial space opportunities provides a diversified income stream with strong cash flow generation for shareholder returns.
Bear Case
The stock faces valuation headwinds due to the cyclical nature of defense contracting where high profit margins can be eroded by inflationary pressures on raw materials and labor. Concentration risk remains elevated as over half of total revenue stems from a single large client, the U.S. Department of Defense, limiting diversification benefits.
About NORTHROP GRUMMAN CORP /DE/
Northrop Grumman Corp (NOC) is a leading American aerospace and defense corporation specializing in systems integration, technology products, and services. The company serves global markets including the U.S. Department of Defense, international allies, and commercial space sectors with critical platforms like the B-2 Spirit stealth bomber and Global Hawk UAVs.
Analysis
Management Discussion
Management successfully navigated recent market dynamics to generate $4.18 billion in net profit for the latest year, demonstrating resilience despite a volatile defense budget environment. The company maintained robust operating cash flow of $4.76 billion while investing $1.45 billion in capital expenditures to sustain its technological edge and infrastructure.
Industry Overview
The global aerospace and defense industry is currently experiencing a structural upcycle driven by geopolitical tensions and aging military fleets requiring modernization. Government budgets are increasingly prioritizing high-tech solutions such as artificial intelligence integration and hypersonic capabilities over traditional hardware procurement.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $36.60B | $39.29B | $41.03B | $41.95B |
| Cost of Revenue | $0 | $0 | $0 | $0 |
| Gross Profit | $36.60B | $39.29B | $41.03B | $41.95B |
| Operating Expenses | $33.00B | $36.75B | $36.66B | $37.44B |
| Operating Income | $3.60B | $2.54B | $4.37B | $4.51B |
| R&D | $1.20B | $1.20B | $1.10B | $1.10B |
| G&A | $3.87B | $4.01B | $3.99B | $4.03B |
| Stock-Based Comp | $99.0M | $87.0M | $101.0M | $119.0M |
| D&A | $1.34B | $1.34B | $1.37B | $1.47B |
| Amortization | $197.0M | $80.0M | $57.0M | $45.0M |
| Other OpEx | $27.93B | $31.54B | $31.57B | $32.31B |
| Non-Operating Income | $2.23B | $-191.0M | $646.0M | $557.0M |
| Pre-Tax Income | $5.84B | $2.35B | $5.02B | $5.07B |
| Income Tax | $940.0M | $290.0M | $842.0M | $886.0M |
| Continuing Ops | $4.90B | $2.06B | $4.17B | $4.18B |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $4.90B | $2.06B | $4.17B | $4.18B |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $4.90B | $2.06B | $4.17B | $4.18B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $12.49B | $13.71B | $14.27B | $15.29B |
| Cash & Equivalents | $2.58B | $3.11B | — | $4.40B |
| Accounts Receivable | $1.51B | $1.45B | $1.27B | $1.38B |
| Inventory | $978.0M | $1.11B | $1.46B | $1.31B |
| Other Current Assets | $7.42B | $8.03B | $11.55B | $8.20B |
| Long-Term Assets | $31.27B | $32.84B | $35.09B | $36.09B |
| PP&E (Net) | $8.80B | $9.65B | $10.54B | $10.97B |
| Intangibles | $384.0M | $305.0M | $254.0M | — |
| Goodwill | $17.52B | $17.52B | $17.51B | $17.44B |
| Operating Leases | $1.81B | $1.82B | $1.77B | $1.86B |
| Other LT Assets | $2.76B | $3.54B | $5.01B | $5.82B |
| Total Assets | $43.76B | $46.54B | $49.36B | $51.38B |
| Current Liabilities | $11.59B | $11.94B | $14.13B | $13.88B |
| Accounts Payable | $2.59B | $2.11B | $2.60B | $3.24B |
| Current Debt | $1.07B | $70.0M | $1.58B | $534.0M |
| Current Leases | $299.0M | $300.0M | $324.0M | $331.0M |
| Deferred Revenue | $3.61B | $4.19B | $4.07B | $4.09B |
| Other Current Liab | $4.02B | $5.27B | $5.55B | $5.69B |
| Long-Term Liabilities | $16.86B | $19.81B | $19.94B | $20.82B |
| Long-Term Debt | $11.80B | $13.79B | $14.69B | $15.16B |
| LT Operating Leases | $1.82B | $1.89B | $1.80B | $1.86B |
| Other LT Liab | $3.23B | $4.13B | $3.45B | $3.80B |
| Total Liabilities | $28.44B | $31.75B | $34.07B | $34.70B |
| Shareholders' Equity | $15.31B | $14.79B | $15.29B | $16.67B |
| Retained Earnings | $15.31B | $14.77B | $15.30B | $16.66B |
| AOCI | $-153.0M | $-128.0M | $-152.0M | $-126.0M |
| Total L&E | $43.76B | $46.54B | $49.36B | $51.38B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $4.90B | $2.06B | $4.17B | $4.18B |
| Non-Cash Adjustments | $-4.25B | $1.66B | $-864.0M | $-76.0M |
| Working Capital Changes | $2.26B | $160.0M | $1.08B | $651.0M |
| Cash from Operations | $2.90B | $3.88B | $4.39B | $4.76B |
| Capital Expenditures | $1.44B | $1.77B | $1.77B | $1.45B |
| Cash from Investing | $-1.24B | $-1.58B | $-1.75B | $-1.16B |
| Debt Issuances | $0 | $2.00B | $2.50B | $998.0M |
| Debt Repayments | $0 | $1.05B | $0 | $1.50B |
| Share Buybacks | $1.50B | $1.50B | $2.51B | $1.62B |
| Dividends Paid | $1.05B | $1.12B | $1.19B | $1.29B |
| Cash from Financing | $-2.61B | $-1.76B | $-1.40B | $-3.55B |
| FX Effect | $0 | $0 | $0 | $0 |
| Net Change in Cash | $-953.0M | $532.0M | $1.24B | $50.0M |
| Beginning Cash | $3.53B | $2.58B | $3.11B | $4.35B |
| Ending Cash | $2.58B | $3.11B | $4.35B | $4.40B |
Frequently Asked Questions
How does NORTHROP GRUMMAN CORP /DE/ make money?
The company's revenue is driven by four primary segments: Mission Systems & Technology providing sensors and communication systems; Missiles & Defense focusing on ballistic missile defense and strike capabilities; Air Combat Systems manufacturing stealth aircraft and unmanned vehicles; and Space Systems offering satellite and launch services.
What are the main risks for NOC?
Heavy reliance on U.S. federal defense spending exposes the stock to budget cuts or shifting policy priorities among elected officials. Long-term contract negotiations often involve complex government accounting adjustments that can impact reported earnings timing. Geopolitical instability or trade restrictions may disrupt global supply chains and affect international sales pipelines.
What is NOC's competitive advantage?
NOC holds dominant market positions in high-barrier-to-entry sectors like strategic bombers and unmanned aerial vehicles, supported by a deep legacy of government trust and long-term fixed-price contracts. The firm leverages significant scale advantages in supply chain management and specialized engineering talent that smaller competitors cannot match.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.