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what it is
Northrop builds military aircraft, missile defense systems, sensors, and satellites, then gets paid mostly by the U.S. government.
how it gets paid
Last year Northrop Grumman made $42.0B in revenue. Aeronautics Systems was the main engine at $12.8B, or 30% of sales.
why it's growing
Revenue grew 2.2% last year. The number that mattered was $95.7B of backlog because it equals more than two years of revenue against a $42.0B annual sales base.
what just happened
Northrop beat earnings with $7.23 in Q4 EPS as sales climbed to $11.71B.
At a glance
A balance sheet — strong enough to weather a downturn
100/100 earnings predictability — you can trust these numbers
25.0x trailing p/e — priced about right
1.6% dividend yield — cash in your pocket every quarter
16.0% return on capital — nothing to write home about
xvary composite: 73/100 — average
What they do
Northrop builds military aircraft, missile defense systems, sensors, and satellites, then gets paid mostly by the U.S. government.
Backlog → work already under contract → so what: Northrop starts with $95.7B of future sales already spoken for, equal to about 2.3 years of revenue against $42.0B in annual sales. The U.S. government was 86.4% of 2024 sales, which is concentration risk. It is also proof that if you want bombers, missile defense, and classified space hardware, the approved vendor list is short.
How they make money
$42.0B
annual revenue · their business grew +2.2% last year
Aeronautics Systems
$12.8B
+4.0%
Defense Systems
$6.0B
+2.0%
Mission Systems
$11.3B
+3.0%
Space Systems
$11.9B
+1.0%
The products that matter
military aircraft programs
Aeronautics Systems
$12.8B · ~31% of sales
Segment table on this page: Aeronautics is the largest line at $12.8B with +4% growth— ahead of company-wide +2.2% FY revenue. That mix is why aircraft programs still set the tone even when consolidated growth looks modest.
scale
mission electronics and defense tech
Mission Systems
$11.3B segment · +3% vs. prior year
Mission Systems is $11.3B— third-largest in this breakout after Aeronautics and Space— with electronics and sensors tied to long-cycle awards. Company-level ROE is about 25% on the $42.0B base, which is the execution signal behind the segments.
execution
space and missile programs
Space and Defense Systems
Space $11.9B · Defense $6.0B
Space Systems leads the breakout at $11.9B (+1%); Defense Systems adds $6.0B (+2%). Consolidated net margin is ~9.8%— roughly a dime on the dollar at the company level.
profit pool
Key numbers
$31.00
fy2027 eps est
$54B
fy2029 rev est
25.0x
trailing p/e
1.6%
dividend yield
Financial health
A
strength
- balance sheet grade A — very strong financial position
- risk rank 2 — safer than 80% of stocks
- price stability 85 / 100
- long-term debt $15.2B (13% of capital)
- net profit margin 9.8% — keeps 10 cents of every dollar in revenue
- return on equity 25% — $0.25 profit for every $1 investors have put in
A with balance sheet grade and risk rank standing out. your money faces less risk here than at most public companies.
Total return vs. market
You invested $10,000 in NOC 3 years ago → it's now worth $15,910.
The index would have given you $13,880.
source: institutional data · total return
What just happened
beat estimates
Northrop beat earnings with $7.23 in Q4 EPS as sales climbed to $11.71B.
Fourth-quarter sales rose 10% vs. prior year, according to the company update cited in the source packet. That was faster than the 5% organic growth seen in the prior quarter and helped push backlog to a record $95.7B.
$11.71B
quarter revenue
$7.23
quarter eps
15.0%
operating margin (quarter)
the number that mattered
The number that mattered was $95.7B of backlog because it equals more than two years of revenue against a $42.0B annual sales base.
-
northrop grumman reported very good fourth-quarter results.
-
December-period sales of $11.71 billion increased 10% from the like-2024 level.
-
this is up from a 5% top-line gain (organically) in the september interim and 2% in june.
-
although strong growth internationally continues to be a theme, the 10% gain is not likely indicative of a continued acceleration of the rate of expansion on sales, but rather the unevenness of the defense contractor’s business.
-
meantime, earnings rose $0.84 per share to $7.23.
source: company earnings report, 2026
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What could go wrong
the #1 risk is u.s. defense budget and procurement volatility — because this is not a diversified consumer business. it is a $42.0B contractor whose customer base starts with government priorities.
med
defense spending slows after a strong growth year
Full-year revenue grew only ~2.2%; the exciting number is backlog ($95.7B), not a high headline growth rate. If appropriations, program timing, or procurement priorities shift, even that low single-digit pace can cool.
This does not threaten a side segment. It pressures the full $42.0B revenue base and makes a 25.0x multiple harder to defend.
med
one strong quarter gets mistaken for a new normal
The December-period update showed 10% sales growth after 5% in September and 2% in June. Even the source text says that 10% is not likely a new trend.
If growth drops back toward the earlier 2–5% range while the stock stays near $702, investors could stop paying up for reliability.
med
big program wins and losses matter more than the headline suggests
Defense primes live on large, long-cycle awards. A delayed award, canceled program, or lost competition can dent future revenue visibility even when the current quarter looks fine.
With net margin near ~9.8%, there is profit cushion here — just not infinite cushion. Execution misses show up quickly in earnings.
a change in federal defense priorities does not clip the edges here. it hits the whole $42.0B revenue base.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
whether growth holds above the earlier 2–5% pace
The last update reached 10% sales growth after 5% in September and 2% in June. That's the trend line that matters now.
margin
net margin ~9.8%
Northrop keeps about a dime of every revenue dollar at the net line. If revenue grows but that margin slips, the quality of the growth is worse than the headline says.
budget
u.s. defense priorities
This business depends on government spending decisions. Watch appropriations, procurement timing, and any shift away from the programs Northrop needs.
valuation
whether 25.0x earnings keeps looking reasonable
At $702.57, the stock is already discounting a lot of stability. If growth normalizes fast, the multiple becomes part of the risk.
Analyst rankings
short-term outlook
average
momentum score 3 — in human-speak, analysts do not see a major short-term edge here.
risk profile
below-average risk
stability score 2 means the stock has been steadier than roughly 80% of names. not risk-free. just calmer.
chart momentum
average
technical score 3 means the chart is behaving normally. there is no screaming signal in the tape.
earnings predictability
100 / 100
Management has been unusually consistent. In plain english: this company rarely springs ugly surprises on you.
source: institutional data
Institutional activity
institutions have been net buying for 2 consecutive quarters — 789 buyers vs. 645 sellers in 3q2025. total institutional holdings: 0.1B shares. net buying for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$576
$928
$703
current price
$752
target midpoint · +7% from current · 3-5yr high: $895 (+25% · 8% ann'l return)
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