For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Northrop Grumman (NOC) ten years ago? It may not have been easy to hold on to NOC for all that time, but if you did, how much would your investment be worth today?
With that in mind, let's take a look at Northrop Grumman's main business drivers.
Originally formed in 1939 as Northrop Aircraft Incorporated and reincorporated in 1985 as Northrop Corporation in Delaware, Northrop was a principal developer of flying wing technology. In 1994, the company acquired Grumman Corporation (Grumman), after which the company was renamed Northrop Grumman Corporation. Currently, this global security company supplies a broad array of products like space systems, military aircraft, missile defense, advanced weapons and long-range fire capabilities, mission systems, networking and communications, strategic deterrence systems, and breakthrough technologies, such as advanced computing, microelectronics and cyber. As of Dec 31, 2023, the company operates through the following reportable segments:
Northrop Grumman's Aeronautics Systems unit focuses on the development, integration, production and support of manned aircraft, unmanned autonomous systems as well as airborne battle management and command and control systems. In 2023, this segment’s revenues came in at $10.79 billion, contributing 27.4% to the company’s total revenues.
Its Defense Systems unit focuses on production of advanced tactical weapons and missile defense solutions. It is also a provider of sustainment, modernization and training services for manned and unmanned aircraft and electronics systems. In 2023, this segment’s revenues came in at $5.86 billion, contributing 14.9% to the company’s total revenues.
The company's Mission Systems unit includes airborne sensors and networks, cyber and intelligence mission solutions, maritime/land systems and sensors, along with navigation, targeting and survivability. In 2023, this segment’s revenues came in at $10.90 billion, contributing 27.7% to the company’s total revenues.
Its Space Systems unit focuses on launch and strategic missile systems as well as varied space related products like satellites and spacecraft systems, sensors and payloads along with launch vehicles and related propulsion systems. In 2023, this segment’s revenues came in at $13.95 billion, contributing 35.5% to the company’s total revenues.
However, total revenues of $39.29 billion in 2023 were adjusted for inter-segment eliminations of $2.20 billion.
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Northrop Grumman, if you bought shares a decade ago, you're likely feeling really good about your investment today.
According to our calculations, a $1000 investment made in January 2015 would be worth $3,270.55, or a 227.06% gain, as of January 22, 2025. Investors should keep in mind that this return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 197.68% and gold's return of 102.13% over the same time frame.
Analysts are forecasting more upside for NOC too.
Northrop boasts a solid presence in Defense as well as Cyber Security programs, with its product line being well-positioned in high-priority categories, such as defense electronics, unmanned aircraft and missile defense. The company has been witnessing strong demand for its products on a global scale with programs like F-35, Triton, SABR radar Global Hawk and E-2D Advanced Hawkeyes. It ended the third quarter with a solid backlog of $84.80 billion. Northrop holds a strong solvency position. Its shares have outperformed the industry in the past six months. However, skilled labor shortages are likely to impact timely deliveries of finished products, which in turn may affect its results. The stock has a higher P/B ratio than its industry. The Tax Cuts and Jobs Act of 2017 is expected to reduce Northrop’s 2024 cash flow from operations.
Over the past four weeks, shares have rallied 7.08%, and there have been 1 higher earnings estimate revisions in the past two months for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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