Shares of Northrop Grumman (NOC, Financial) experienced a significant decline of 13.65% following the release of its Q1 2025 earnings report, which revealed sales and profits that fell short of Wall Street expectations. The stock is now priced at USD 458.82.
Northrop Grumman Corp (NOC, Financial), a stalwart in the aerospace and defense sector, is currently navigating some financial turbulence. Despite operating within a robust industry, the company is confronting financial stress indicators such as a Grey Altman Z-score of 2.99, hinting at potential financial difficulties. Moreover, profitability metrics like gross margin and operating margin have shown consistent declines, with average annual decreases of -2.4% and -5.9%, respectively.
The company's valuation presents a mixed picture. Northrop Grumman has a Price-to-Earnings (P/E) ratio of 16.2 and a Price-to-Book (PB) ratio of 4.35, which is near a two-year high. However, the stock's Price is close to a 10-year high, suggesting that it may be overvalued compared to its historical performance. Despite these challenges, the company has positive attributes, including a high Piotroski F-Score of 7, which indicates a healthy financial position, and consistent revenue per share growth.
In terms of valuation, Northrop Grumman's stock is considered "Modestly Undervalued" with a GF Value of USD 534.59. Investors can explore this valuation further on the GF Value page.
Looking at the company's capital structure and liquidity, Northrop Grumman's Debt-to-Equity ratio stands at 1.08, which is manageable but underscores the need for careful capital management. The cash-to-debt ratio of 0.26 further accentuates concerns over liquidity. Nevertheless, the company's Return on Equity (ROE) is impressive at 28.45%, reflecting Northrop Grumman's ability to generate profit from its equity base.
While insider activity shows some caution with 10 insider selling transactions over the past three months, the long-term outlook remains optimistic if the company can capitalize on its core strengths and address current profitability challenges. Investors will want to monitor how Northrop Grumman (NOC, Financial) maneuvers through these financial headwinds while leveraging potential growth opportunities in the aerospace and defense industry.
