Northrop Grumman: Backlog, Margin Friction

Moretus Research
670 Followers

Summary

  • Northrop Grumman's $92.8bn backlog and >90% revenue visibility offer rare stability, but margin friction and execution risk temper upside potential.
  • Our Hold rating and $564 price target reflect strong top-line resilience, but persistent cost inflation and program ramp risks limit near-term margin recovery.
  • Consensus underestimates profitability and timing risks, especially with B-21 and Sentinel; our forecasts are more conservative on EBITDA and margin outlook.
  • We remain on the sidelines, awaiting clear, sustained margin recovery and execution progress before considering an upgrade, given currently balanced risk/reward.
View inside the aviation hangar, the airplane mechanic working around the service.

aapsky

Margin Tension Crosses Structural Strength

Initiating with a Hold rating and a $564 PT, Northrop Grumman Corporation (NYSE:NOC) is a global leader in defense systems, from autonomous aircraft to mission avionics to next-gen space assets. Beneath the surface of this mature

This article was written by

Moretus Research
670 Followers
Moretus Research delivers state-of-the-art, buy-side quality equity research for serious investors seeking clarity, conviction, and alpha. We focus on going beyond the obvious. We practice positive paranoia when analyzing investments — understanding sentiment, knowing where our competition is right or wrong, and how that will shape the future of any given security we’re researching. We won’t always be right, but we’re right more often than we’re wrong. More importantly, when we are right, we’re right big. At the beginning of 2023, Oskar Goyvaerts, our CIO, recommended and bought Carvana at $5 per share for our readers — pointing out that the 88% short interest was wildly overblown and that alternative data signaled a looming turnaround. That idea returned more than 60x over three years. Finding another Carvana is unlikely, but we’re confident in our ability to cut through the noise, focus on fundamentals, and uncover a data edge through carefully curated alternative data sources. We cover everything from businesses we own to companies we follow closely because we may want to own them in the future.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

About NOC Stock

SymbolLast Price% Chg
Market Cap
PE
Yield
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on NOC

Related Stocks

SymbolLast Price% Chg
NOC
--
Compare

Trending Analysis

Trending News