Investment Thesis
Northrop Grumman demonstrates solid fundamental strength with a 10.0% net margin, exceptional ROE of 25.1%, and consistent free cash flow generation of $3.3B annually. The company maintains a healthy balance sheet with manageable leverage (0.94x debt/equity) and adequate liquidity, though revenue growth remains modest at 2.2% YoY.
NOC Strengths
- Exceptional return on equity of 25.1% indicates efficient capital deployment
- Strong free cash flow of $3.3B provides financial flexibility and dividend capacity
- Solid profitability with 10.0% net margin and 10.8% operating margin
- Conservative leverage ratio of 0.94x debt/equity with adequate liquidity (1.10x current ratio)
- Defense sector positioning provides stable, long-term revenue visibility
NOC Risks
- Modest revenue growth of 2.2% YoY suggests limited organic expansion
- High leverage with $15.7B long-term debt against $16.7B equity limits financial flexibility
- Low current ratio of 1.10x indicates tight near-term liquidity management
- Net income growth of only 0.2% YoY despite revenue growth reflects margin pressure
- Dependence on government contracts introduces regulatory and budgetary risks
Key Metrics to Watch
- Revenue growth trajectory and backlog trends in defense contracts
- Operating margin expansion potential and cost management efficiency
- Free cash flow sustainability and capital allocation priorities
- Debt reduction progress and leverage ratio improvement
- Order book health and contract win rates in core markets
NOC Financial Metrics
NOC Profitability Ratios
NOC Balance Sheet & Liquidity
NOC 5-Year Financial Trend
5-Year Trend Summary: NORTHROP GRUMMAN CORP /DE/'s revenue has grown significantly by 14% over the 5-year period, indicating strong business expansion. The most recent EPS of $13.53 reflects profitable operations.
NOC Growth Metrics (YoY)
NOC Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2025 | $10.0B | $1.0B | $7.00 |
| Q2 2025 | $10.2B | $940.0M | $6.36 |
| Q1 2025 | $9.5B | $481.0M | $3.32 |
| Q3 2024 | $9.8B | $937.0M | $6.18 |
| Q2 2024 | $9.6B | $812.0M | $5.34 |
| Q1 2024 | $9.3B | $842.0M | $5.50 |
| Q3 2023 | $9.0B | $915.0M | $5.89 |
| Q2 2023 | $8.8B | $812.0M | $5.34 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
NOC Capital Allocation
NOC SEC Filings
Access official SEC EDGAR filings for NORTHROP GRUMMAN CORP /DE/ (CIK: 0001133421)