Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 13 Jun, 25 | NOC | Buy | USD 497.13 | USD 520.0 | USD 545.0 | 31 days | Closed |
5.36%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Northrop Grumman Corporation operates as an aerospace and defense company worldwide. The company's Aeronautics Systems segment designs, develops, manufactures, integrates, and sustains aircraft systems in the United States and internationally. This segment also offers unmanned autonomous aircraft systems, including high-altitude long-endurance strategic ISR systems and vertical take-off and landing tactical ISR systems; and strategic long-range strike aircraft, tactical fighter and air dominance aircraft, and airborne battle management and command and control systems. Its Defense Systems segment designs, develops, and produces weapons and mission systems. It offers products and services, such as integrated battle management systems, weapons systems and aircraft, and mission systems. This segment also provides command and control and weapons systems, including munitions and missiles; precision strike weapons; propulsion, such as air-breathing and hypersonic systems; gun systems and precision munitions; life cycle service and support for software, weapons systems, and aircraft; and logistics support, sustainment, operation, and modernization for air, sea, and ground systems. The company's Mission Systems segment offers cyber, command, control, communications and computers, intelligence, surveillance, and reconnaissance systems; radar, electro-optical/infrared and acoustic sensors; electronic warfare systems; advanced communications and network systems; cyber solutions; intelligence processing systems; navigation; and maritime power, propulsion, and payload launch systems. This segment also provides airborne multifunction sensors; maritime/land systems and sensors; navigation, targeting, and survivability solutions; and networked information solutions. Its Space Systems segment offers satellites and payloads; ground systems; missile defense systems and interceptors; launch vehicles and related propulsion systems; and strategic missiles. The company was founded in 1939 and is based in Falls Church, Virginia.
Record Backlog: The company reported a new record backlog of $92.8 billion, signaling strong future demand
Strong Contract Awards: Net new awards totaled $10.8 billion, including $4.6 billion in restricted programs and $1.1 billion for F-35-related work.
Free Cash Flow Deterioration: Free cash flow decreased by 87%, from $(976) million in Q1 2024 to $(1,821) million in Q1 2025
Earnings Decline: Net earnings dropped 49%, from $944 million in Q1 2024 to $481 million in Q1 2025
Northrop Grumman faces material investment risk from potential cost overruns and process changes in critical programs like B-21, which have already resulted in a $477 million loss provision, thereby threatening profitability and operational reliability
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 497.13 | 455.0 | 520.0 | 545.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Financial Performance Overview: Northrop Grumman reported a notable decline in its financial results for the first quarter of 2025. The company posted sales of USD 9.5 billion, representing a 7% year-over-year decrease from USD 10.1 billion in Q1 2024. This decline was driven by two fewer working days in the quarter and the ongoing wind-down of specific Space Systems programs. Operating income dropped 46% to USD 573 million, compared to USD 1.07 billion in the prior-year period, primarily due to a USD 477 million loss provision on the B-21 program.
Earnings and Shareholder Returns: Net earnings for the quarter amounted to USD 481 million, or USD 3.32 per diluted share, down significantly from USD 944 million, or USD 6.32 per share, in the same quarter last year. Despite these reductions, the company returned nearly USD 800 million to shareholders through dividends and stock buybacks and repaid USD 1.5 billion in long-term debt. This demonstrates Northrop Grumman’s continued commitment to shareholder value and financial prudence.
Segment Performance Highlights: Among its segments, Aeronautics Systems experienced the most substantial setback with an 8% sales decline and an operating loss of USD 183 million, attributed largely to the B-21 LRIP loss provision. Space Systems also saw an 18% decrease in sales due to the conclusion of key restricted space and NGI programs. In contrast, Mission Systems and Defense Systems showed resilience; Mission Systems grew sales by 6% while Defense Systems increased both sales (up 4%) and operating income (up 15%).
Cash Flow and Free Cash Flow Trends: Cash from operating activities declined sharply, recording a negative USD 1.57 billion compared to a negative USD 706 million a year earlier. The free cash flow worsened to a negative USD 1.82 billion, an 87% decline. These results were largely influenced by a rise in vendor payments and timing differences in collections and billings. Nonetheless, the cash flow pattern is consistent with the company’s seasonal trends, typically weighted toward the second half of the year.
Backlog and Contract Awards: Despite financial setbacks, the company reported strong order intake with net awards of USD 10.8 billion and a record-high backlog of USD 92.8 billion. Significant new awards included USD 4.6 billion for restricted programs and USD 1.1 billion for the F-35 program. This robust backlog reflects sustained demand for the company’s offerings and provides future revenue visibility.
Guidance and Strategic Positioning: Northrop Grumman reaffirmed its 2025 full-year guidance, projecting sales between USD 42.0 billion and USD 42.5 billion and free cash flow in the range of USD 2.85 to USD 3.25 billion. However, the company revised its MTM-adjusted EPS guidance downward to USD 24.95–USD 25.35 from the earlier range of USD 27.85–USD 28.25. The company emphasized its long-term growth strategy rooted in innovation, operational efficiency, and responsiveness to evolving defense needs.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Northrop Grumman Corporation (NYSE: NOC) at the closing market price of USD 497.13, as on June 12, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Industrials Industry: Aerospace & Defense
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| NOC Northrop Grumman Corporation |
-4.985 0.95% | 518.85 | 15.22 | 18.48 | 1.78 | 4.33 | 2.13 | 11.11 |
| BA The Boeing Company |
-2.265 0.98% | 228.74 | - | 294.12 | 1.68 | - | 2.25 | 111.56 |
| EADSY Airbus Group NV |
0.25 0.46% | 54.10 | 27.76 | 21.51 | 1.93 | 7.21 | 1.79 | 13.93 |
| EADSF Airbus Group SE |
2.11 0.99% | 215.80 | 27.24 | 21.28 | 1.91 | 7.14 | 1.79 | 13.93 |
| RTX Raytheon Technologies Corp |
-0.07 0.05% | 151.43 | 38.65 | 15.77 | 1.77 | 1.69 | 2.22 | 16.02 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is June 12,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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