Analyses / NOC
Large-cap defense contractor; valuation compressed 29% from 52-week high. Stable dividend, modest growth, insider mixed signals.
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The Thesis
▲ Bull Case
Aerospace & defense tailwinds from U.S. defense spending, geopolitical tensions, China competition. P/E 16.8x below long-term average for quality. FCF conversion solid (9.97% net margin). Dividend 1.8% yield, 31% payout ratio leaves room. Citi maintains Buy. Recent insider buying uptick (48 buys vs 88 sells YTD).
▼ Bear Case
Down 29% from $774 peak; valuation compression signals uncertainty or growth deceleration. EPS growth YoY: -2.59% (recent earnings pressure). 5-year revenue growth only 2.66%; organic expansion anemic. Forward P/E 18.4x rising relative to current, implying analyst caution. Insider sells outnumber buys 2:1 cumulative. Beta near zero—defensive but lacks upside catalysts.
Valuation
Fair — score 72/100
P/E 16.8x below historical defense-sector mean (18–20x); supported by stable FCF and dividend. Forward P/E 18.4x slightly rich vs. current, hinting analyst caution on near-term growth. P/B 4.88x reasonable for quality industrials. EV/EBITDA 15.2x mid-range for large-cap defense.
Technical Levels
Support · $520.00 (Round level; 52W low at $493.84) · $537.37 (Today's day low)
Resistance · $570.00 (Recent swing high; 4% above current) · $610.00 (12-month target; 11.4% above current) · $680.00 (Bull scenario; 24% upside)
Financial Health
Score 72/100. Balance sheet healthy but working capital tight (quick ratio 0.97). Likely relies on efficient inventory/payables management typical of defense contractors. No insolvency risk; dividend well-supported.
Catalysts
| Q3 Earnings (likely Sept/Oct 2024) | ~6–8 weeks | Critical. EPS trend will validate/invalidate turnaround narrative. If beat + guidance raise, stock could 8–12% rally. Miss could pressure to $520–$530. |
| Pentagon Budget / Appropriations Bill | Fall 2024 / early 2025 | High. Defense spending reauthorization is annual market event. If NOC wins contract language or funding boost, tailwind. Cuts rare but possible if fiscal pressure rises. |
| Billionaire Investor Accumulation (Talpin) | Recent (confirms institutional demand) | Medium-positive. Signals smart money confidence; may attract passive / index funds. Unlikely to move stock alone but validates entry zone. |
| Rare Earth Supply Chain / China Policy | Ongoing / policy-driven | Medium. NOC may benefit from U.S. onshoring, supply-chain resilience. Long-tail tailwind, not binary catalyst. |
| Dividend Increase / Buyback Announcement | Typically annual (early/mid 2025) | Medium. NOC has 31% payout ratio; room to hike 5–8% annually. Supports 2–3% total return lift over 12 months. |
Risk Flags
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Unlock NOC free →Recent News
- Northrop Grumman Corporation (NOC) Is A Top Pick In Billionaire Talpins' FilingsYahoo
- The U.S. Army Just Took a Historic Step to Break China's Rare Earth DominanceYahoo
- Citi Keeps Buy Rating on Northrop Grumman (NOC)Yahoo
- 3 Resilient Defense Stocks to Buy in JulyYahoo
- AeroVironment's Big Bet Gets a Pentagon PaydayYahoo
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NOC FAQ
Is NOC a buy right now?
Northrop Grumman Corp's current read is a Value + Income setup with 68 confidence over a 6-12 months horizon. Valuation: Fair. See the full bull and bear case above, or run a live analysis for the exact entry, target and stop.
Is NOC overvalued?
Fair (valuation score 72/100). P/E 16.8x below historical defense-sector mean (18–20x); supported by stable FCF and dividend. Forward P/E 18.4x slightly rich vs. current, hinting analyst caution on near-term growth. P/B 4.88x reasonable for quality industrials. EV/EBITDA 15.2x mid-range for large-cap defense.
What are the risks of buying NOC?
Down 29% from $774 peak; valuation compression signals uncertainty or growth deceleration. EPS growth YoY: -2.59% (recent earnings pressure). 5-year revenue growth only 2.66%; organic expansion anemic. Forward P/E 18.4x rising relative to current, implying analyst caution. Insider sells outnumber buys 2:1 cumulative. Beta near zero—defensive but lacks upside catalysts.