Northrop Grumman has delivered four consecutive earnings beats and a 29% return on equity with strong peer-relative valuation, but a confirmed death-cross technical pattern, high US government customer concentration of 84%, and below-average free cash flow quality present meaningful risks for new buyers.
Thesis pillars
- Consecutive Earnings Beat Streak→Stable
- Government Customer Concentration↓Deteriorating
- Death Cross Momentum Blockage↓Deteriorating
- +1 more pillar — see the Why tab for full reasoning
Northrop Grumman Corporation (NOC) Stock Analysis
Recovery setup
Industrials · Aerospace & Defense
Sell if holding. At $542.24, A.R:R 0.6:1 is below the 1.5:1 minimum. Reward from here is too thin for a buy — the engine flags exit. Additional concerns: Thin upside margin: 6.5%; Concentration risk — Customer: U.S. government (84.0%).
Northrop Grumman develops aerospace and defense technology across four segments—Aeronautics Systems, Defense Systems, Mission Systems, and Space Systems—serving primarily the U.S. Department of War and intelligence community. The company generated $41.95 billion in 2025 sales,... Read more
Sell if holding. At $542.24, A.R:R 0.6:1 is below the 1.5:1 minimum. Reward from here is too thin for a buy — the engine flags exit. Additional concerns: Thin upside margin: 6.5%; Concentration risk — Customer: U.S. government (84.0%). Chart setup: Death cross but MACD improving, RSI 47. Score 5.3/10, moderate confidence.
Passes 6/8 gates (positive momentum, clean insider activity, no SEC red flags, earnings proximity 87d clear, semi cycle peak clear, materials cycle peak clear). Fails on favorable risk/reward ratio. Suitability: moderate.
About Northrop Grumman Corporation
About Northrop Grumman Corporation
Northrop Grumman's total backlog reached $95.7 billion at December 31, 2025, up from $91.5 billion a year earlier, supporting $41.95 billion in 2025 sales—84% from the U.S. government. The company's approximately 95,000 employees are organized across four segments: Aeronautics Systems (B-21 Raider development and B-2 sustainment), Defense Systems (strategic missiles and precision weapons), Mission Systems (radar, electronic warfare, and cyber), and Space Systems (satellites, missile defense, and launch vehicles). Fixed-price and cost-type contracts each represented 50% of 2025 sales.
Northrop Grumman generates revenue under both cost-type contracts—which reimburse allowable costs plus a fixed or variable fee—and fixed-price contracts, where the contractor bears cost-overrun risk. In 2025, approximately half of sales derived from fixed-price contracts, including development-phase programs where cost estimation is inherently uncertain. Key programs include the B-21 Raider long-range strike aircraft in development, the Sentinel EMD intercontinental ballistic missile modernization, F-35 fuselage production for the U.S. and allied nations, E-2D Advanced Hawkeye production for the U.S. Navy, Japan, and France, and solid rocket boosters for the ATLAS V and Vulcan launch vehicles. The company competes directly with The Boeing Company, General Dynamics Corporation, L3Harris Technologies, Lockheed Martin Corporation, and RTX Corporation. Approximately 40% of Aeronautics Systems, 45% of Space Systems, and 30% of Mission Systems business is classified as restricted programs. Raw material and microelectronics shortages have created cost and lead-time pressure without materially impairing contract performance to date.
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Northrop Grumman's 84% U.S. government revenue dependence is both the foundation of the business and its primary concentration risk. If costs on certain programs exceed thresholds or schedules slip, the U.S. government must notify Congress under the Nunn-McCurdy Act, which may result in program restructure or termination—an outcome that could materially affect program-level profitability and the company's reputation for future bids. The company also disclosed that a recent executive order applicable to government defense contractors may restrict share repurchases and dividends if underperformance, insufficient investment, or insufficient production speed is determined—a constraint without direct parallel in commercial contracting.
See also: Industrials · Aerospace & Defense
From Northrop Grumman Corporation's most recent 10-K filing, extracted June 11, 2026.
Recent developments
updated 2026-07-26Recent Developments — Northrop Grumman Corporation
Latest news
- NEWS Northrop Grumman’s Q2 Earnings Beat on EPS by 13%. Two Program Charges Held It Back. - TIKR.com — TIKR.com positive
- NEWS Why Did PSKY, MCD, NOC Stocks Tumble To 52-Week Lows Today? - Stocktwits — Stocktwits negative
- NEWS Northrop Grumman (NOC) Named Top Pick by Morgan Stanley Analyst - GuruFocus — GuruFocus positive
- NEWS Northrop Grumman (NOC) Stock Fair Value Edges Lower As Analysts Trim Targets - Yahoo Finance — Yahoo Finance negative
- NEWS Analysts Offer Insights on Industrial Goods Companies: Northrop Grumman (NOC) and ITT (ITT) - The Globe and Mail — The Globe and Mail positive
Generated 2026-07-26T08:02:04Z.
Upcoming dated catalysts
Thesis
Key Metrics
Quality Signals
Options Flow
Concentration Risks(10-K Item 1A)
- HIGHCustomerU.S. government84%10-K Item 1A: 'Our primary customer is the U.S. government, from which we derived 84 percent of our sales in 2025.'
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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Rating Breakdown
2 floor-breakers
Growth below the gate floor. Component breakdown shows what dragged the score down.static
Technicals below the gate floor. Component breakdown shows what dragged the score down.static
Price Targets
Position Sizing
Risk Alerts
Earnings
Verdict History
Frequently Asked Questions
Sell if holding. At $542.24, A.R:R 0.6:1 is below the 1.5:1 minimum. Reward from here is too thin for a buy — the engine flags exit. Additional concerns: Thin upside margin: 6.5%; Concentration risk — Customer: U.S. government (84.0%). Chart setup: Death cross but MACD improving, RSI 47. Prior stop was $509.72. Score 5.3/10, moderate confidence.
Take-profit target: $577.76 (+6.5% upside). Prior stop was $509.72. Stop-loss: $509.72.
Concentration risk — Customer: U.S. government (84.0%); Thin upside margin: 6.5%; Weak growth.
Northrop Grumman Corporation trades at a P/E of 17.0 (forward 17.9). TrendMatrix value score: 6.0/10. Verdict: Sell.
28 analysts cover NOC with a consensus score of 3.8/5. Average price target: $642.
What does Northrop Grumman Corporation do?Northrop Grumman develops aerospace and defense technology across four segments—Aeronautics Systems, Defense Systems,...
Northrop Grumman develops aerospace and defense technology across four segments—Aeronautics Systems, Defense Systems, Mission Systems, and Space Systems—serving primarily the U.S. Department of War and intelligence community. The company generated $41.95 billion in 2025 sales, 84% from the U.S. government, with a backlog of $95.7 billion at December 31, 2025 and approximately 95,000 employees.