MMarketMath

NOC

Slow growerQuality: Medium (66/100)

Northrop Grumman · Industrials · Aerospace & Defense

$549.28

52w 479.02 – 774.00

20y monthly, adjusted

Mkt cap

$78.0B

P/E

18.7

P/FCF

23.6

FCF yield

4.2%

ROE

25.1%

Shldr yield

3.7%

div 1.7% + bb 2.1%

What today's price assumes

At $78.0B, the market is pricing in 10.0% annual free-cash-flow growth for the next decade (10% discount rate, 2.5% terminal growth). Over the last ten years, FCF actually grew 6.9% per year — the price asks for acceleration beyond the historical record.

Simple DCF per-share range: $355 · $440 · $548 (4% / base / optimistic growth). An estimate, not a target.

Adjust the assumptions yourself →

Historical multiple lens

At its own median P/OCF of 11.1× across 19 years, NOC would trade near $372/share (25th–75th percentile: $198–$527); it trades at 16.4× today.

Assumes the historical multiple regime persists — re-ratings can be permanent.

Growth record

Compound annual growth rates from as-filed 10-K data, split-adjusted

Rev 3y

+4.7%

Rev 5y

+2.7%

Rev 10y

+6.0%

EPS 5y

+8.9%

EPS 10y

+10.8%

FCF 5y

+2.8%

FCF 10y

+6.9%

Fundamentals

Fiscal 2007–2025, from SEC filings

Revenue

2007: $30.3B
2008: $32.3B
2009: $27.6B
2010: $28.1B
2011: $26.4B
2012: $25.2B
2013: $24.7B
2014: $24.0B
2015: $23.5B
2016: $24.7B
2017: $26.0B
2018: $30.1B
2019: $33.8B
2020: $36.8B
2021: $35.7B
2022: $36.6B
2023: $39.3B
2024: $41.0B
2025: $42.0B
$0$20.0B$40.0B
07
11
15
19
23

Net income

2007: $1.8B
2008: −$1.3B
2009: $1.7B
2010: $2.1B
2011: $2.1B
2012: $2.0B
2013: $2.0B
2014: $2.1B
2015: $2.0B
2016: $2.0B
2017: $2.9B
2018: $3.2B
2019: $2.2B
2020: $3.2B
2021: $7.0B
2022: $4.9B
2023: $2.1B
2024: $4.2B
2025: $4.2B
$0$2.5B$5.0B
07
11
15
19
23

Free cash flow

2007: $2.2B
2008: $2.5B
2009: $1.7B
2010: $1.9B
2011: $1.6B
2012: $2.3B
2013: $2.1B
2014: $2.0B
2015: $1.7B
2016: $1.9B
2017: $1.7B
2018: $2.6B
2019: $3.0B
2020: $2.9B
2021: $2.2B
2022: $1.5B
2023: $2.1B
2024: $2.6B
2025: $3.3B
$0$1.0B$2.0B$3.0B
07
11
15
19
23

Diluted shares (lower is better)

2007: 354.3M
2008: 334.5M
2009: 323.3M
2010: 301.1M
2011: 281.6M
2012: 253.4M
2013: 233.9M
2014: 212.1M
2015: 191.6M
2016: 180.5M
2017: 175.6M
2018: 174.6M
2019: 170.0M
2020: 167.6M
2021: 160.9M
2022: 155.6M
2023: 152.0M
2024: 147.3M
2025: 143.8M
0100.0M200.0M300.0M
07
11
15
19
23

Margins

0%10%20%07101316192225
Net marginFCF marginGross margin

Capital returned (dividends + buybacks)

2007: $1.7B
2008: $2.1B
2009: $1.6B
2010: $1.7B
2011: $2.8B
2012: $1.9B
2013: $2.9B
2014: $3.2B
2015: $3.8B
2016: $2.2B
2017: $1.1B
2018: $2.1B
2019: $1.6B
2020: $1.4B
2021: $4.7B
2022: $2.6B
2023: $2.6B
2024: $3.7B
2025: $2.9B
$0$2.0B$4.0B
07
11
15
19
23

Cash vs long-term debt

$0$5.0B$10.0B$15.0B07101316192225
CashLT debt

Quarterly

Discrete quarters from 10-Q filings; Q4 derived as fiscal year minus Q1–Q3. OCF is unwound from the year-to-date figures 10-Qs report. Compare to the same quarter a year ago — most businesses are seasonal.

Revenue by quarter

Q2'23: $9.6B
Q3'23: $9.8B
Q4'23: $10.6B
Q1'24: $10.1B
Q2'24: $10.2B
Q3'24: $10.0B
Q4'24: $10.7B
Q1'25: $9.5B
Q2'25: $10.4B
Q3'25: $10.4B
Q4'25: $11.7B
Q1'26: $9.9B
Q2'26: $10.9B
$0$5.0B$10.0B
23
24
24
25
26

Net income by quarter

Q2'23: $812.0M
Q3'23: $937.0M
Q4'23: −$535.0M
Q1'24: $944.0M
Q2'24: $940.0M
Q3'24: $1.0B
Q4'24: $1.3B
Q1'25: $481.0M
Q2'25: $1.2B
Q3'25: $1.1B
Q4'25: $1.4B
Q1'26: $875.0M
Q2'26: $1.1B
−$500.0M$0$500.0M$1.0B
23
24
24
25
26
QuarterRevenueYoYNet incomeYoYEPSOCF
Q2'26$10.9B+5.1%$1.1B−6.8%7.68$1.3B
Q1'26$9.9B+4.4%$875.0M+81.9%6.14−$1.7B
Q4'25 *$11.7B+9.6%$1.4B+12.9%9.94$3.9B
Q3'25$10.4B+4.3%$1.1B+7.2%7.67$1.6B
Q2'25$10.4B+1.3%$1.2B+24.9%8.15$868.0M
Q1'25$9.5B−6.6%$481.0M−49.0%3.32−$1.6B
Q4'24 *$10.7B+0.5%$1.3B—8.66$2.6B
Q3'24$10.0B+2.3%$1.0B+9.5%7.00$1.1B
Q2'24$10.2B+6.7%$940.0M+15.8%6.36$1.4B
Q1'24$10.1B+8.9%$944.0M+12.1%6.32−$706.0M
Q4'23 *$10.6B+6.0%−$535.0M−125.7%-3.49$2.4B
Q3'23$9.8B+9.0%$937.0M+2.4%6.18$1.2B
Q2'23$9.6B+8.8%$812.0M−14.2%5.34$919.0M

Track record

Compound annual growth by period. For debt and share count, negative is the good direction.

Series3y5y10y15y
Revenue+4.7%+2.7%+6.0%+2.7%
Operating cash flow+17.9%+2.0%+8.2%+4.5%
Free cash flow+31.1%+2.8%+6.9%+3.9%
EPS (diluted)−2.6%+8.9%+10.8%+10.2%
Equity+2.9%+9.5%+11.7%+1.4%
LT debt+8.7%+1.2%+8.8%+8.0%
Diluted shares−2.6%−3.0%−2.8%−4.8%
Stock price+9.9%+10.0%+11.7%+18.8%

$100, 3 years ago

$133vs $176 in SPY

9.9% vs 20.7%/yr

$100, 5 years ago

$161vs $181 in SPY

10.0% vs 12.6%/yr

$100, 10 years ago

$303vs $412 in SPY

11.7% vs 15.2%/yr

$100, 15 years ago

$1,331vs $813 in SPY

18.8% vs 15.0%/yr

The $1 test — market value created per $1 of earnings retained (Buffett's hurdle: at least $1)

Last 5 years

$3.29

$54.9B created / $16.7B retained

Last 10 years

$2.62

$68.8B created / $26.3B retained

Quality & capital discipline

Cash-based returns and how management deploys capital

Cash ROIC

14.9%

OCF ÷ (equity + debt)

OCF / EV yield

5.4%

MC vs 10× OCF

1.64

≤1 = priced under 10× OCF

Debt / FCF

4.6y

SBC / FCF

3.6%

Owner earnings

$3.2B

OCF − capex − SBC

OE yield

4.1%

Share count 5y

−4.9%

per year; negative = buybacks

Capital intensity

26.2%

net PP&E ÷ revenue

Sales efficiency

$0.76

new PP&E per $1 new revenue, 5y

Growth engine (5y): reinvested 38.5% of operating cash flow at an incremental return of 6.0% — an organically fundable growth rate of about 2.3% per year (growth ≈ reinvestment rate × incremental ROIC).

Checklist

19 of 25 checks pass · 76%. Checks with structurally missing inputs are excluded.

Growth & Consistency

4/7

  • Revenue growth

    2.7% · 5y CAGR ≥ 5%

    fail

  • EPS growth

    8.9% · 5y CAGR ≥ 5%

    pass

  • FCF growth

    2.8% · 5y CAGR ≥ 5%

    fail

  • Revenue rises consistently

    8 of 9 · up in ≥ 7 of last 10 years

    pass

  • FCF consistently positive

    10 of 10 · positive in ≥ 8 of last 10 years

    pass

  • Profitable every year

    10 of 10 · net income > 0 in ≥ 8 of last 10

    pass

  • Cash flow keeps up with sales

    2.0% vs 2.7% · OCF CAGR ≥ 0.9× revenue CAGR

    fail

Profitability

6/6

  • Net margin

    10.0% · ≥ 8%

    pass

  • Operating margin

    10.8% · ≥ 10%

    pass

  • Gross margin stable or rising

    — · no drop > 2 pts over 3y

    na

  • Return on equity

    25.1% · ≥ 12%

    pass

  • Cash ROIC

    14.9% · ≥ 12%

    pass

  • FCF margin

    7.9% · ≥ 5%

    pass

  • Earnings back their cash

    OCF $4.8B vs NI $4.2B · OCF ≥ net income (latest FY)

    pass

Balance Sheet

2/4

  • Debt payable from cash flow

    4.6y · LT debt ≤ 3× FCF

    fail

  • Cash cushion

    29% · cash ≥ 50% of LT debt

    fail

  • Leverage

    0.91 · LT debt ≤ 1.5× equity

    pass

  • Equity positive and compounding

    $16.7B · equity > 0 and grew over ~5y

    pass

  • Interest burden

    — · interest ≤ 15% of operating income

    na

Capital Allocation

4/4

  • Share count flat or shrinking

    -4.9% · ≤ +0.5%/yr over ~5y

    pass

  • Stock comp restrained

    4% · SBC ≤ 15% of FCF

    pass

  • Distributions funded by FCF

    88% · dividends + buybacks ≤ 100% of FCF

    pass

  • Repurchases are a habit

    10 of 10 · buybacks in ≥ 5 of last 10 years

    pass

Valuation Discipline

3/4

  • FCF yield

    4.2% · ≥ 3%

    pass

  • Earnings multiple

    18.7 · P/E ≤ 25

    pass

  • Price asks less than history delivered

    10.0% vs 6.9% · implied FCF growth ≤ historical FCF CAGR

    fail

  • Shareholder yield

    3.7% · dividends + buybacks ≥ 2% of market cap

    pass

Financial data

As filed in 10-Ks; per-share figures split-adjusted. $ in millions.

FYRevenueGross profitOp incomeNet incomeEPSOCFCapExFCFDividendsBuybacksSBCCashLT debtEquityShares
202541,954—4,5114,18229.084,7571,4503,3071,2931,6241194,40315,16216,674144
202441,033—4,3704,17428.344,3881,7672,6211,1862,5141014,35314,69215,290147
202339,290—2,5372,05613.533,8751,7752,1001,1161,500873,10913,78614,795152
202236,602—3,6014,89631.472,9011,4351,4661,0521,504992,57711,80515,312156
202135,667—5,6517,00543.543,5671,4152,1529833,705943,53012,77712,926161
202036,799—4,0653,18919.034,3051,4202,885953490904,90714,26110,579168
201933,841—3,9692,24813.224,2971,2643,0338807441272,24512,7708,819170
201830,095—3,7803,22918.493,8271,2492,5788211,263861,57914,4008,187175
201726,004—3,2182,86916.342,6139281,6856893939411,22515,2667,132176
201624,706—3,2772,04311.322,8139201,8936401,547932,5417,0705,363181
201523,526—3,0761,99010.392,1624711,6916033,182992,3196,5265,522192
201423,979—3,1962,0699.752,5935612,0325632,6681343,8635,9287,235212
201324,661—3,1231,9528.352,4833642,1195452,3711445,1505,93010,620234
201225,218—3,1301,9787.812,6403312,3095351,3161833,8623,9249,514253
201126,412—3,2762,1187.522,1154921,6235432,2951403,0023,92910,336282
201028,143—2,8272,0536.822,4535851,8685451,1771363,7014,80813,436301
200927,650—2,2741,6865.212,1334731,6605391,1001053,2744,19112,566323
200832,315—-263-1,262-3.773,2116812,5305251,5551181,5043,44311,920335
200730,341—2,9251,7905.122,8906812,2095041,175196963—17,687354

Some concepts are structurally absent for certain industries (banks report no gross profit or capex). Missing ≠ zero.

Compare with peers →·10-K filings on EDGAR ↗