Northrop Grumman: Not Cheap Enough Before Q1'26
Summarize this article with:
Wolf ReportInvesting Group LeaderFollow5ShareSavePlay(17min)Comment(1)SummaryNorthrop Grumman is rated 'HOLD' due to significant overvaluation versus historical and sector norms.NOC's current 25x P/E is not justified by its 6-7% AEPS growth and 1.37% dividend, given sector headwinds and contract risks.MTM accounting increases volatility and obscures long-term financial health, especially amid cost overruns like the B-21 Raider program.A $450/share price target reflects fair value, with upside limited until valuation normalizes or growth meaningfully accelerates.I do much more than just articles at Wolf of Value: Members get access to model portfolios, regular updates, a chat room, and more. Learn More » jetcityimage/iStock Editorial via Getty Images Northrop Grumman Overview I downgraded Northrop Grumman (NOC) a bit too early. In my last article, at the end of 2025, I gave the company a "HOLD" rating due to overvaluation. The company then, through February, proceeded to climb further, only toThis article was written byWolf Report35.12K FollowersFollowWolf Report is a senior analyst and private portfolio manager with over 10 years of generating value ideas in European and North American markets.He covers the markets of Scandinavia, Germany, France, UK, Italy, Spain, Portugal and Eastern Europe in search of reasonably valued stock ideas.Analyst’s Disclosure: I/we have a beneficial long position in the shares of NOC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. While this article may sound like financial advice, please observe that the author is not a CFA or in any way licensed to give financial advice. It may be structured as such, but it is not financial advice. Investors are required and expected to do their own due diligence and research prior to any investment. Short-term trading, options trading/investment and futures trading are potentially extremely risky investment styles. They generally are not appropriate for someone with limited capital, limited investment experience, or a lack of understanding for the necessary risk tolerance involved. I own the European/Scandinavian tickers (not the ADRs) of all European/Scandinavian companies listed in my articles. I own the Canadian tickers of all Canadian stocks I write about. Please note that investing in European/Non-US stocks comes with withholding tax risks specific to the company's domicile as well as your personal situation. Investors should always consult a tax professional as to the overall impact of dividend withholding taxes and ways to mitigate these.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.