NOC Value Scorecard - Northrop Grumman

Value Scorecard · run 2026-10-18

13 value checks: 12 scored 1 to 5, plus moat evidence

40/60

moderate value score

Earnings & returns

EPS Trend

2/5

Diluted EPS: $31.47 (2022), $13.53 (2023), $28.34 (2024), $29.08 (2025). It ended at or below 2022; the framework scores that as 2.

ROE Trend

5/5

ROE (net income / common equity): 32.0% (2022), 13.9% (2023), 27.3% (2024), 25.1% (2025). Median 26.2%, lowest 13.9%; the framework scores a median above 20% as 5.

ROIC

3/5

ROIC of 12.0%: operating income of $4.51B divided by $37.49B of capital (total assets $51.38B minus current liabilities $13.88B), fiscal year to Dec 31, 2025, as filed in the 10-K (SEC EDGAR). The framework scores 10-15% as 3.

Profit Margins

4/5

Net margin of 10.5%; the framework scores 10-20% as 4; gross margin 20.1%, operating margin 11.6%.

Balance sheet & cash

Debt-to-Equity

3/5

Debt-to-equity of 0.95; the framework scores 0.8-1.5 as 3 (total debt $17.05B, total cash $2.31B).

Free Cash Flow

5/5

Free cash flow (operating cash flow minus capital expenditure): $1.47B (2022), $2.10B (2023), $2.62B (2024), $3.31B (2025). It rose every year; the framework scores that as 5.

Retained Earnings

4/5

Retained earnings, as filed in the 10-Ks (SEC EDGAR): $15.31B (2022), $14.77B (2023), $15.30B (2024), $16.66B (2025). It rose every year but one and ended above 2022; the framework scores that as 4.

Valuation models

Graham IV

5/5

IV = EPS x (8.5 + 2g) x (4.4 / Y) = $31.46 x (8.5 + 2 x 20.0) x (4.4 / 4.5) = $1,491.90 (EPS CAGR 46.6% capped at 20%). Current price $519.86; price is 65.2% below the model value.

DCF Value

1/5

FCF/share = $17.443, stage 1 growth = 3.3% for 5 years, terminal growth = 3%, discount rate = 10%. Stage 1 PV = $72.51, PV of terminal value = $187.46, DCF value = $259.97. Current price $519.86; price is 100.0% above the model value.

Margin of Safety

3/5

Graham value $1,491.90 (price is 65.2% below the model value); DCF value $259.97 (price is 100.0% above the model value).

Price-to-Book

2/5

P/B of 4.13; the framework scores 3.0-5.0 as 2.

Business quality

Moat Evidence

Not scored

A moat (a brand, a network, switching costs, patents, scale, a licence) is not a number in the filings, so Valerius doesn’t score it. Below are the figures and the words moat analysis starts from, from the company’s own 10-K filings. The conclusion is yours.

Return on capital, each year

Above 15% in 2 of 10 years (2016-2025); lowest 7.3%, highest 17.1%.

Gross margin, each year

Not reported: the filings don’t state a gross profit or cost of revenue figure, as is common for oil and gas companies, banks and insurers.

Competition, in the company’s own words · 10-K filed Jan 27, 2026

We compete with many companies in the defense, intelligence and federal civil markets, including The Boeing Company, General Dynamics Corporation, L3Harris Technologies, Inc., Lockheed Martin Corporation, and RTX Corporation, as well as, increasingly, new entrants and startups. Key characteristics of our industry include long operating cycles and intense competition, which is evident through the number of

The opening of the company’s “COMPETITIVE CONDITIONS” section in its 10-K, quoted word for word, not summarized or edited. It is the company’s own description, not Valerius’s view, and may include the company’s expectations. Open the filing.

Return on capital = operating income / (total assets − current liabilities), the ROIC row’s definition; 15% is the framework’s return threshold. Gross margin = gross profit / revenue. Both from each year’s 10-K via SEC EDGAR. Moat analysis commonly looks at whether returns and margins held up over many years. These figures don’t say whether the company has an advantage, what it is, or whether it will last.

Capital Allocation

3/5

Capital allocation, 2022-2025: dividends or buybacks paid in every year (pass); $11.79B paid out against $9.49B of free cash flow (fail: paid out more than free cash flow); total debt $13.63B to $17.02B, up 24.9%, 2.4x EBITDA (fail: up more than 10% and above 2x EBITDA); shares outstanding 0.15B to 0.14B, down 7.3% (pass). 2 of 4 tests passed; the framework scores that as 3.

Filings

Company notices to the SEC

Not scored

Three kinds of event the company reported to the SEC in the last 5 years, from its filings on SEC EDGAR.

These are events the company reported to the SEC. An auditor change or a late filing can have many causes; each date links to the filing, where the company explains it. Valerius does not score these.

How the Graham and DCF values were calculated

  Graham Formula:
    IV = EPS x (8.5 + 2g) x (4.4 / Y)
    EPS = $31.46, g = 20.0%, Y = 4.5
    g capped at 20.0% (3-year EPS CAGR was 46.6%)
    IV = $1,491.90
    Current price $519.86 vs Graham value $1,491.90 — price is 65.2% below the model value.

  DCF:
    FCF/share = $17.443
    Stage 1 growth = 3.3% for 5 years | terminal growth = 3.0% | discount rate = 10.0%
      Y1: $18.019 → PV $16.381
      Y2: $18.613 → PV $15.383
      Y3: $19.227 → PV $14.446
      Y4: $19.862 → PV $13.566
      Y5: $20.517 → PV $12.740
    Stage 1 PV sum = $72.51
    Terminal value at end of Y5 = $301.90
    PV of terminal value = $187.46
    DCF value = $259.97
    Current price $519.86 vs DCF value $259.97 — price is 100.0% above the model value.

Data from yfinance summary figures and financial statements, and from the company’s 10-K filings via SEC EDGAR; computed at a price of $519.86. Every score is calculated from the figures by the framework’s fixed rules, and the explanation beside it is generated from the same figures: Graham value, DCF value, margin of safety, ROIC, profit margins, debt-to-equity, price-to-book, EPS trend, ROE trend, free cash flow, retained earnings and capital allocation. No AI is involved in this scorecard. The moat is shown as evidence, without a score. Read each score with the figures beside it. Intrinsic value calculations are model outputs based on stated assumptions, not predictions.

Recent headlines · third-party publishers · not investment advice

In the news

Loading headlines...

The 8 newest headlines whose title names the company, shown automatically and never chosen by Valerius. From third-party publishers via Yahoo Finance, linked to the source. Valerius doesn't write or endorse them. Not investment advice.

NOC · Northrop Grumman

NOC price