Northrop Grumman Corporation (NOC) Fair Value & PE Analysis
Aerospace & Defense · NYSE
Current Price
$537.80
PE Ratio (TTM)
16.7x
Intrinsic Value
$631.26
+14.8% margin of safety
What Is Northrop Grumman Corporation's Fair Value?
As of 2026-06-15, applying a 17.0x earnings multiple to Northrop Grumman Corporation's (NOC) earnings per share of $32.2 yields a fair value estimate of $631.26 per share, versus a market price of $537.8.
Fair value from earnings multiples is sensitive to the multiple you choose. Across the sensitivity grid the estimate spans $502.53 to $779.62. This is a relative estimate anchored to earnings, not a statement of fact. For a cash flow based view, see the intrinsic value estimate on the DCF page.
How our PE model works · Recalculate in PE mode · NOC intrinsic value (DCF view)
Is Northrop Grumman Corporation (NOC) Overvalued?
At $537.8, NOC trades about 14.8% below its PE-based fair value estimate, a modest discount to its earnings power, though not enough for us to call it cheap outright.
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 PE valuation
Intrinsic Value
$631.26
Margin of safety
+14.8%
Expected annual return
+3.3%
Base case assumptions: 7.2% annual earnings growth, 17x target PE, 10% discount rate, 5 year projection. Data as of 2026-06-15.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the NOC PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Northrop Grumman Corporation respond.
Open PE 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 PE Stock Valuation Data
PE Ratio (TTM)
16.7x
PEG Ratio
0.64
Earnings Yield
5.99%
ROE (TTM)
28.1%
Revenue/Share (TTM)
$298.15
Dividend Yield
1.75%
Debt/Equity
1.00x
Frequently Asked Questions
What is the PE ratio of NOC?
The trailing twelve-month PE ratio of NOC reflects how much investors pay per dollar of Northrop Grumman Corporation's earnings. This metric is most useful when compared to Aerospace & Defense peers and the company's own historical range.
Is NOC overvalued based on PE ratio?
NOC's PE of 16.7x combined with a PEG ratio of 0.64 provides a growth-adjusted perspective. A PEG below 1.0 suggests NOC may be undervalued relative to its earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Aerospace & Defense, a DCF analysis may be more appropriate.
How do I value NOC stock using PE ratio?
To value Northrop Grumman Corporation using PE: (1) Compare the current PE (16.7x) against the Aerospace & Defense median to assess relative pricing, (2) check the PEG ratio (0.64) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of NOC?
NOC's PEG ratio is 0.64, calculated by dividing the PE ratio (16.7x) by the expected earnings growth rate. A PEG below 1.0 is traditionally considered a sign of undervaluation — the market may not be fully pricing in the growth potential. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for NOC stock valuation?
PE ratio gives a quick relative read — how NOC is priced versus Aerospace & Defense peers. DCF provides an absolute value based on projected free cash flows. For NOC, with a strong ROE of 28.1%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See NOC DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Industrials valuationsP/E and DCF value NOC with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic 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.