Northrop Grumman Corporation (NYSE:NOC) operates as an aerospace and defense company worldwide. The company’s Aeronautics Systems segment designs, develops, manufactures, integrates, and sustains aircraft systems. This segment also offers unmanned autonomous aircraft systems, including high-altitude long-endurance strategic ISR systems and vertical take-off and landing tactical ISR systems; and strategic long-range strike aircraft, tactical fighter and air dominance aircraft, and airborne battle management and command and control systems. Its Defense Systems segment designs, develops, and produces weapons and mission systems. It offers products and services, such as integrated battle management systems, weapons systems and aircraft, and mission systems. This segment also provides command and control and weapons systems, including munitions and missiles; precision strike weapons; propulsion, such as air-breathing and hypersonic systems; gun systems and precision munitions; life cycle service and support for software, weapons systems, and aircraft; and logistics support, sustainment, operation, and modernization for air, sea, and ground systems. The company’s Mission Systems segment offers cyber, command, control, communications and computers, intelligence, surveillance, and reconnaissance systems; radar, electro-optical/infrared and acoustic sensors; electronic warfare systems; advanced communications and network systems; cyber solutions; intelligence processing systems; navigation; and maritime power, propulsion, and payload launch systems. This segment also provides airborne multifunction sensors; maritime/land systems and sensors; navigation, targeting, and survivability solutions; and networked information solutions. Its Space Systems segment offers satellites and payloads; ground systems; missile defense systems and interceptors; launch vehicles and related propulsion systems; and strategic missiles. The company was founded in 1939 and is based in Falls Church, Virginia.
Northrop Grumman is one of the largest aerospace and defense contractors in the world with a $75 billion market cap. The company operates through four segments: Aeronautics Systems; Defense Systems; Mission Systems; and Space Systems. Its largest source of revenue is providing aircraft systems with tactical intelligence, weapon and mission systems for the military, radar, electro-optical/infrared and acoustic sensors.
NOC certainly fits the criteria for this list of the best defensive stocks as the company has consistently grown its revenues, earnings, free cash flow and dividends. Over the last five years, each of these metrics has averaged annual growth of 8.5%, 20.3%, 8.8% and 11.8%, respectively. This is because defense spending continues to grow on an aggregate level, and NOC is one of the premier stocks in the sector.
In addition to its relative stability as a defense stock, NOC does offer outsized growth potential given its exposure to the space industry. Northrop’s customers include NASA and telecommunications companies, as it provides services related to space logistics, satellite launches and maintenance, space security, and propulsion systems. Overall, revenue from the space industry is expected to reach $1 trillion by 2040 from its current $350 billion, according to Morgan Stanley.
The POWR Ratings system gives Northrop Grumman an overall grade of A, which equates to a Strong Buy. NOC has a Value Grade of B as its forward P/E comes in at 16.1 – below the S&P 500’s 20.3. Plus, a 17-year streak of dividend hikes earns it solid B grades for both quality and stability. It has an Analyst Rating of four Strong Buys, six Buys, and nine Holds.
Great for term holding.