Northrop Grumman (NOC): Taking Stock of Valuation After a Strong Year-to-Date Share Price Run

Northrop Grumman (NOC) has quietly kept investors interested this year, with the stock up about 21% year to date and roughly 23% over the past year, outpacing many defense peers.

See our latest analysis for Northrop Grumman.

At a share price of $568.46, Northrop Grumman has seen steady upward momentum this year, with a strong year to date share price return contributing to a robust one year total shareholder return as investors warm to its growth pipeline and perceived resilience.

If Northrop Grumman's run has caught your attention, it could be a good moment to explore other opportunities across aerospace and defense stocks and see which names are building similar momentum.

With shares near record highs, solid mid single digit earnings growth, and a healthy discount to analyst targets, investors face a key question: Is Northrop Grumman still undervalued or is future growth already fully priced in?

Most Popular Narrative Narrative: 14.2% Undervalued

With Northrop Grumman last closing at $568.46 against a narrative fair value near $663, the prevailing view leans toward meaningful upside if its long term thesis plays out.

The ramp up of advanced autonomous and integrated systems such as Beacon and IBCS, combined with ongoing investments in solid rocket motor capacity (targeting a near doubling by 2029), positions the company to capitalize on high growth, higher margin market segments, thereby enhancing future operating margins and underlying cash flow.

Read the complete narrative.

Curious how modest growth assumptions, steady margins, and a higher future earnings multiple combine to justify that premium fair value target? The full narrative unpacks the exact revenue runway, earnings trajectory, and valuation bridge that support this upside case, step by step.

Result: Fair Value of $662.68 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that upside depends on flawless execution, with any major setbacks on B 21 or Sentinel contracts, or shifting U S budget priorities, threatening the thesis.

Find out about the key risks to this Northrop Grumman narrative.

Another View on Valuation

Our SWS DCF model presents a more cautious view, indicating that Northrop Grumman is trading above its estimated fair value of about $515 per share. This suggests the stock may be slightly overvalued rather than undervalued. Which perspective do you find more compelling: the narrative premium or the cash flows?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Northrop Grumman for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 914 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Northrop Grumman Narrative

If you are not fully aligned with this view or would rather dig into the numbers yourself, you can build a custom narrative in just a few minutes: Do it your way.

A great starting point for your Northrop Grumman research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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