Northrop Grumman Corporation (NOC) Stock Valuation — DCF Analysis
Aerospace & Defense · NYSE
Current Price
$543.43
Intrinsic Value
$579.33
+6.2% margin of safety
COMPETITIVE MOAT
↑Long-Term Defense Contracts
Securing multi-year Navy contracts, like the recent GQM-163A support, demonstrates deep integration and recurring revenue streams. This provides predictable cash flow and entrenches NOC in critical defense programs.
↑Drone Technology Pivot
NOC's strategic shift to low-cost, versatile drone and anti-drone platforms positions them for a future defense landscape. This adaptability addresses evolving battlefield needs and creates new market opportunities.
↑Established Supplier Relationships
The company's role in supporting complex defense systems implies strong, long-standing relationships with government agencies and other prime contractors. This creates high switching costs for its customers.
INVESTMENT RISKS
↓Competition in Drone Market
While pivoting to drones is a strength, the market is becoming increasingly crowded. NOC faces competition from both established players and agile startups in this rapidly evolving sector.
↓Dependence on Government Spending
NOC's revenue is heavily reliant on defense budgets and government procurement decisions. Shifts in political priorities or budget constraints could significantly impact their business.
↓Supply Chain Vulnerabilities
While not directly mentioned, the aerospace and defense industry can be susceptible to disruptions in specialized component supply chains. Geopolitical events or material shortages could pose a risk.
Base case
NOC base case valuation
A base case discounted cash flow model for NOC estimates an intrinsic value of about $579.33 per share, against a current price of $543.43. The model assumes 7.2% annual free cash flow growth, a 10.0% discount rate, and a 23x exit multiple.
Intrinsic Value
$579.33
Margin of safety
+6.2%
Expected annual return
+1.3%
Base case assumptions: 7.2% annual growth, 10.0% discount rate, 23x exit multiple, 5 year projection. Data as of 2026-06-15.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the NOC valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Northrop Grumman Corporation respond.
Open DCF Calculator for NOCCompany Overview
Northrop Grumman Corporation is a leading global player in the aerospace and defense sectors. Its Aeronautics Systems division is responsible for the full lifecycle of aircraft, from design and development to production, integration, and ongoing maintenance. This includes a diverse portfolio of crewed and uncrewed aerial platforms: advanced strategic long-range strike aircraft, tactical fighter and air superiority jets, and sophisticated airborne systems for battle management and command and control. Additionally, it specializes in autonomous uncrewed aircraft systems, such as high-altitude, long-endurance strategic intelligence, surveillance, and reconnaissance (ISR) platforms, alongside vertical take-off and landing tactical ISR systems. The Defense Systems segment focuses on creating and delivering a wide array of weapons and mission technologies. Its offerings encompass integrated battle management solutions, various weapons platforms, and specialized aircraft. Key products include command and control systems, munitions, and missiles, alongside precision strike capabilities. The segment is also at the forefront of propulsion technologies, offering both air-breathing and advanced hypersonic systems, as well as sophisticated gun systems and precision munitions. Beyond products, it provides comprehensive life-cycle support, including software services, ongoing maintenance, logistics, operational assistance, and modernization efforts for air, sea, and ground-based defense systems. Within its Mission Systems division, Northrop Grumman delivers critical capabilities spanning cybersecurity, C4ISR (command, control, communications, computers, intelligence, surveillance, and reconnaissance). This includes developing advanced sensing technologies such as radar, electro-optical/infrared, and acoustic sensors, alongside electronic warfare systems. The division also provides cutting-edge communications and networking solutions, intelligence processing, navigation systems, and maritime power, propulsion, and payload launch systems. Furthermore, it supplies airborne multifunction sensors, integrated maritime and land-based systems, targeting and survivability solutions, and robust networked information platforms. The Space Systems segment is a key provider of space-based solutions, delivering satellites and their associated payloads, along with essential ground control systems. It specializes in missile defense systems, including interceptors, and offers a range of launch vehicles with their propulsion components, as well as strategic missile technologies. Established in 1939, the corporation maintains its headquarters in Falls Church, Virginia.
Financial Metrics — NOC Stock Valuation Data
Revenue/Share (TTM)
$298.15
FCF/Share (TTM)
$23.26
ROIC (TTM)
10.3%
ROE (TTM)
28.1%
P/FCF
23.4x
EV/EBITDA
12.0x
FCF Yield
4.28%
Debt/Equity
1.00x
Based on trailing twelve-month data, NOC shows a free cash flow per share of $23.26 and a ROIC of 10.3%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 23.4x and FCF yield of 4.28% are important context metrics when evaluating NOC's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of NOC?
Northrop Grumman Corporation currently generates $23.26 in free cash flow per share. At the current price of $543.43, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is NOC undervalued?
NOC trades at a P/FCF ratio of 23.4x with a free cash flow yield of 4.28%. This P/FCF is in a moderate range. However, whether NOC is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value NOC stock using DCF?
To perform a DCF valuation on Northrop Grumman Corporation: (1) Start with the trailing free cash flow per share ($23.26) as the base, (2) project future FCF growth over 5-10 years based on Aerospace & Defense industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting NOC's risk profile — with a debt-to-equity of 1.00x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to NOC?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Northrop Grumman Corporation, this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Aerospace & Defense trends, then discounting those amounts to today's dollars. NOC's ROIC of 10.3% shows moderate capital returns.
How does WACC affect NOC stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For NOC, with a debt-to-equity ratio of 1.00x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 12.0x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See NOC PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Industrials valuationsDCF and P/E value NOC with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-15. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.