NYSE · Industrials · Aerospace & Defense
NOC Northrop Grumman Corporation
As of 2026-05-20 · Falls Church, VA
Business summary
Northrop Grumman is the prime contractor on two of the most consequential US defense programs: the B-21 Raider strategic bomber and the Sentinel intercontinental ballistic missile (ICBM) replacement for Minuteman III. Beyond these flagship programs, NOC operates four segments: Aeronautics Systems, Defense Systems, Mission Systems, and Space Systems. The space business — including national-security space launches, GBSD support, and classified work — is a structural grower.
Among US primes, NOC has historically had the cleanest fundamentals: lower F-35-style execution drag than LMT, less commercial-aerospace cyclicality than RTX, and a strategic positioning concentrated in programs that don't depend on annual budget negotiations (B-21, Sentinel are multi-year structured commitments). The Sentinel program has had cost-overrun issues that triggered a Nunn-McCurdy review — that's the key idiosyncratic risk to track.
Connected theses
- T004 — European rearmament is a multi-year structural shift, not a one-off bump · core
Best-positioned US prime. B-21 + ICBM modernization + classified backlog.
Key metrics
| Backlog (FY25) | ~$85-90B Multi-year revenue visibility. | FY2025 |
|---|---|---|
| B-21 program | Production ramp underway; classified Multi-decade flagship. | Recent |
| Sentinel ICBM | Cost overruns triggered Nunn-McCurdy; restructured Risk + opportunity. | 2024-2025 |
Valuation snapshot
| Price | $550.00 |
|---|---|
| Market cap | $80B |
| Forward P/E | 18.0× |
| EV / EBITDA | 13.0× |
| FCF yield | 5.0% |
Cheapest large US prime on cash flow. Sentinel overhang has compressed multiple; clearer execution would re-rate.
Evidence
- First $1T+ US defense bill; FY27 proposal $1.5T; European budgets +20% YoY.
Catalysts
- Q2 earnings medium
What to watch: B-21 commentary, Space segment growth, FY guidance - FY27 DoD budget submission high
What to watch: Topline level + Air Force / Space Force allocations
Falsifiers
- B-21 production schedule slips materially or unit cost exceeds plan
armed · Annual reports + DoD program reviews - Sentinel program restructured to remove NOC scope
armed · DoD announcements - US defense topline cut >10% in FY27 budget
armed · Congressional appropriations
Agent notes
Hold. The right US prime to overweight vs LMT. Sentinel is the swing factor — successful restructuring + classified-space growth would unlock the multiple.
Educational notes
📚 cost-plus vs fixed-price contracts
Defense contracts come in two flavors. Cost-plus: the contractor is reimbursed for costs incurred plus a fee — used for high-uncertainty programs (early R&D, novel weapons). Risk lies with the government. Fixed-price: contractor agrees to deliver at a stated price; overruns are eaten by the contractor. Used for production runs of mature systems. The trick is that early-stage programs often migrate to fixed-price at production — which is where contractors like Boeing got crushed on KC-46 and where Lockheed has struggled on F-35 LRIP lots. NOC's B-21 contract structure is reportedly hybrid; how aggressive the fixed-price elements become as production scales is a key margin variable.
Open questions
- B-21 unit cost run-rate?
- Sentinel restructure final scope?
- Classified Space Systems growth rate?