Northrop Grumman (NYSE: NOC)
Quality Value Investing Research Report | $NOC Updated Coverage | December 2025
In this updated coverage research report, we reexamine the QVI Real-Time Stock Picks industrials sector component, Northrop Grumman Corporation NOC 0.00%↑, to determine whether it still meets the criteria for Quality Value Investing based on our checklist analysis of the company’s current wealth and the stock price’s present value.
Northrop Grumman | Current Wealth
Value Proposition
Northrop Grumman is a dividend-paying large-cap stock in the industrials sector’s aerospace & defense industry. It was added to the QVI Real-Time Stock Picks on March 25, 2022, at a cost basis of $436.73 per share, adjusted for cash dividends.
Northrop Grumman Corporation (NYSE: NOC) is an aerospace and defense technology company operating in the United States, Asia/Pacific, Europe, and worldwide. The company’s segments include Aeronautics Systems (strategic and tactical aircraft and support), Defense Systems (weapons and ground-based missile defense solutions), Mission Systems (intelligence, surveillance, and reconnaissance), and Space Systems (satellites, spacecraft, and atmosphere-based missile defense). Founded in 1939, the company is headquartered in Falls Church, Virginia, USA.
Economic Moat
Morningstar assigns Northrop Grumman a wide moat rating because its intangible assets in the defense industry allow established firms to meet the ongoing demands of the military-industrial complex, creating substantial barriers to entry.
QVI’s Value Proposition Elevator Pitch for NOC
Northrop Grumman is a well-established part of the US military-industrial complex, benefiting from ongoing incremental growth and stable profit margins.
QVI’s value proposition rating for Northrop Grumman: Bullish.
Returns on Management
Revenue Growth and Profit Margins
As shown in the checklist table below, Northrop Grumman’s trailing five-year annualized revenue growth was in the low to mid single digits, underperforming the S&P 500's 15.4% topline growth. Additionally, the company’s -0.1% revenue growth lagged the broader market’s 18.6% increase in the most recent 12-month period.
Further down the income statement, Northrop Grumman reported a positive, nearly double-digit net profit margin, driven by a gross margin heavily influenced by COGS, and underperformed the S&P 500’s 23.0% net margin and 54.6% gross margin.
Returns on Equity and Invested Capital
Northrop Grumman’s senior management achieved a return on equity (ROE) above QVI’s target threshold but lagged behind the S&P 500’s 50.0% ROE.
Stock buyback programs often boost ROE. For example, Northrop Grumman is actively repurchasing its shares, most recently approving an additional $3 billion for buybacks in December 2024, bringing the total authorizations to about $4.2 billion. The company also completed a $1 billion accelerated share repurchase (ASR) agreement earlier in 2024 and plans to return most or all of its free cash flow to shareholders through dividends and buybacks this year.
Northrop Grumman’s return on invested capital (ROIC) aligned with QVI’s threshold but fell short of the broader market’s 28.3% return. Nonetheless, the company’s ROIC was 5 times its weighted average cost of capital (WACC), indicating that its senior executives are effective at allocating capital.
Owners’ Earnings
In a further test of management effectiveness, the five-year trailing current wealth of QVI owners’ earnings for Northrop Grumman, or EPS growth plus dividend rate growth annualized, was in double digits, representing an excellent return rate for stockholders.
However, switching from EPS growth to free cash flow growth causes owners’ earnings to plummet to a poor -9.15%. Meanwhile, Northrop Grumman’s trailing 1-year EPS growth soared to +72.3%.
Nevertheless, the company’s track record of strong management returns remains intact.
QVI’s business fundamentals rating for Northrop Grumman: Bullish.
Next, we’ll analyze the company’s enterprise downsize risks, the stock price’s present value—including shareholder yields, valuation, and share price downside risks—and the investment thesis, all exclusive to Quality Value Investing’s premium (paying) subscribers.
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