Northrop Grumman Corporation

(New York Stock Exchange)
Back to all articles
Slightly Bullish +25

NOC Outperforms Industry in the Past Year: Should You Buy the Stock?

AI-generated analysis

πŸ“ˆ NOC stock has outperformed its industry and sector but lagged behind the S&P 500 over the past year.

⬆️ Shares rose 14% annually, surpassing Zacks Aerospace-Defense (9.2%) and Aerospace sectors (13.8%).

πŸ›οΈ Competitors Huntington Ingalls (HII) and General Dynamics (GD) achieved stronger annual gains of 36.6% and 28.4%, respectively.

πŸ’° April 2026 financials showed net sales of $9.88 billion, a 4.4% year-over-year increase.

πŸ’Ή Adjusted earnings per share reached $6.14, marking a 1.3% rise from the prior year.

🚁 In May 2026, NOC launched flight testing for the XRQ-73 hybrid-electric uncrewed aircraft at Edwards Air Force Base.

βš”οΈ The company recently secured a U.S. Army contract to develop the Improved Threat Detection System (ITDS) Phase 2.

🌏 NOC was selected by Australia to discuss establishing solid rocket motor manufacturing capabilities there.

πŸ“Š Analysts project 4.7% sales growth and 6.3% earnings growth for 2026 based on consensus estimates.

⚠️ Downward revisions in 2026 and 2027 earnings forecasts indicate some investors are losing confidence in future earnings.

πŸ“‰ NOC trades at a forward P/E of 19.52X, which is below the industry average of 32.24X.

πŸ’§ The company maintains a current ratio of 1.15, confirming sufficient liquidity to meet short-term debt obligations.

βš–οΈ Peer companies HII (1.19) and GD (1.38) also maintain healthy current ratios above one.

🌐 Rising U.S. tariffs, including a new 10% global tariff, could impact the defense market but NOC expects minimal negative effect.

πŸ“‰ Zacks Rank #3 suggests investors should currently hold the stock rather than initiate new positions.

Bullish Signals
  • NOC stock has risen 14% in the past year, outperforming both the Zacks Aerospace-Defense industry's growth of 9.2% and the broader Zacks Aerospace sector's gain of 13.8%.
  • In April 2026, NOC reported solid results with net sales of $9.88 billion, up 4.4% year over year.
  • The company's adjusted earnings of $6.14 per share increased 1.3% from the prior-year level.
  • NOC successfully started flight testing of its XRQ-73 hybrid-electric uncrewed aircraft, designed to support next-generation propulsion technology and improve fuel efficiency.
  • The U.S. Army awarded NOC a contract for the second phase development of its Improved Threat Detection System (ITDS), building on successful flight tests that demonstrated strong threat detection capabilities.
  • NOC was selected by the Commonwealth of Australia to participate in discussions related to establishing solid rocket motor manufacturing capabilities, expanding international defense partnerships.
  • The Zacks Consensus Estimate implies year-over-year sales growth of 4.7% and earnings growth of 6.3% for 2026.
  • NOC trades at a forward 12-month P/E of 19.52X, which represents a discount to the industry average of 32.24X.
  • NOC maintains a current ratio of 1.15, indicating sufficient capital to pay off short-term debt obligations.
Risk Factors
  • The downward revision in NOC's 2026 and 2027 earnings consensus estimates over the past 60 days suggests decreasing investor confidence in its future earnings generation capabilities.
  • NOC trades at a forward P/E of 19.52X, which is significantly below the industry average of 32.24X, indicating that investors may currently be undervaluing the stock despite its recent gains.
  • Rising economic tensions and new U.S. tariffs, such as the recently implemented 10% global tariff under legal changes replacing IEEPA measures, could negatively impact the global defense market.
  • The uncertainty surrounding the duration of tariffs, potential exemptions, and retaliatory responses from other countries remains a risk factor for the company's international operations.
Full Analysis
Northrop Grumman (NOC) stock has gained 14% over the past year, outperforming the Zacks Aerospace-Defense industry which rose 9.2%, though it trailed the S&P 500's 35.4% return. While peers Huntington Ingalls Industries (HII) and General Dynamics (GD) posted stronger gains of 36.6% and 28.4% respectively, analysts suggest investors should evaluate long-term fundamentals rather than chasing recent rallies. The company reported solid financial results in April 2026 with net sales of $9.88 billion, up 4.4% year over year, and adjusted earnings of $6.14 per share, a 1.3% increase from the prior year. Recent growth drivers include technological advancements and contract wins. In May 2026, NOC announced flight testing for its XRQ-73 hybrid-electric uncrewed aircraft under DARPA's SHEPARD program at Edwards Air Force Base, aiming to improve fuel efficiency and operational flexibility. The company also secured a U.S. Army contract for the second phase of its Improved Threat Detection System (ITDS) following successful initial tests, and was selected by Australia to discuss establishing solid rocket motor manufacturing capabilities locally. Analyst consensus estimates predict 2026 sales growth of 4.7% and earnings growth of 6.3%, though downward revisions in these forecasts over the past 60 days indicate some waning investor confidence in near-term earnings generation. Valuation-wise, NOC's forward 12-month price-to-earnings ratio is 19.52X, significantly lower than the industry average of 32.24X and slightly below General Dynamics at 20.48X but higher than Huntington Ingalls at 17.80X, suggesting the stock is reasonably priced compared to peers. The company maintains a healthy liquidity position with a current ratio of 1.15, above its peers' ratios of 1.19 and 1.38. Potential risks include global economic tensions and shifting trade policies, such as new U.S. tariffs which could impact the defense market, though management believes these will not have a significant negative impact. Given the discounted valuation but also declining earnings estimates, the stock carries a Zacks Rank #3 (Hold), suggesting existing investors may consider holding while new investors might wait for better earnings visibility before taking a position.