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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Northrop Grumman Corporation (XNYS:NOC) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
NOC
Name:
NORTHROP GRUMMAN CORPORATION (XNYS:NOC)
Sector:
- 732000.00K
Industry:
Aerospace & Defense
CEO:
Ms. Kathy Warden
Total Employees:
88,000
Our Technological Advancement Rating
Our Rating:
A+
Technological advancement compared to industry is 604.70% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF NORTHROP GRUMMAN CORPORATION(NOC) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND AEROSPACE & DEFENSE INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
476.95
One Month Price Target:
$478.58
Six Month Price Target :
$486.71
Likely Price in One Year's Time:
Ticker:
$496.48
Likely Trading Range Today Under (Normal Volatility)
$475.67
Price Upper limit ($) :
$478.84
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$458.1
This week:
$434.8
This month :
$392.66
Other Primary facts
Market Cap:
74.22B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
154.71M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
13.%
-10.15%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$564.36
$523.93
$389.54
$429.97
Medium risk (<10%) entry points
Buy Call
Sell Call
$510.77
Buy Put:
Sell Put:
$502.14
$443.02
$451.76
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
NOC
Sharpe Ratio:
2.85%
Comparison:
NOC, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 162.96% higher than the industry
& ratio is 25.16% higher than the market/S&P 500 average
Average Returns/Yield of
NOC
Daily returns:
0.06%
Weekly returns:
0.32%
Monthly returns:
1.29%
Yearly returns:
10.44%
Comparison of returns:
Average annual returns/yield (last 3 years) is 48.57% above industry average
Classification:
NOC, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.83
Statistical test of Returns:
NOC has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
1.96%
Weekly Volatility:
4.37%
Monthly Volatility:
8.75%
Yearly Volatility:
30.30%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.65%
Volatility in last five trading days has been -66.66% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-3.95%
Weekly VaR:
-8.84%
Monthly VaR:
-17.67%
How Much Can the price of
NOC
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-15%
Worst case (decline):
-61.22%
This translates to price declining to:
$405.95
This translates to price declining to:
$184.96
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
NOC is a 24.73% riskier investment compared to the market/S&P 500 & is 6.86% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -38.07% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
NOC
Beta in relation to market/S&P 500--0.61
Expected beta in 1 year's time:
0.552
Expected beta in 3 year's time:
0.78
Unlevered (debt free) Beta:
0.322
Beta in relation to Nasdaq (XNAS):
0.392
Beta in relation to all global stocks::
0.572
Beta Comparison & Analysis
Beta of competitors/peers::
0.961
Beta is -36.62% lower than peers
Average Industry Beta:
1.007
Beta is -39.50% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
52.31%
Sustainable growth rate is 162.49% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.082
Alpha is 1975.37% above industry average alpha yield
Alpha is 521% higher than market/& is unsustainably high
Analysis of Cost of Capital of
NOC
Equity cost of capital:
0.073
Equity cost of capital is -27.11% below industry mean WACC
Unlevered (without debt) cost of capital:
3.88%
Before-tax cost of debt:
3.68%
After-tax cost of debt:
2.91%
Overall debt rating:
Upper medium A grade (third highest grade),CO8<=0.0429,"Medium BBB grade (Fourth highest grade)
Weighted average cost of capital (WACC):
2.91%
WACC is -27.12% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$228.21
Revenue growth rate per share of (3Y):
5.55
Annual revenue growth rate is -67.24% below industry average
EPS:
$36.28
Expected Annual growth rate of EPS (3Y):
48.56%
Expected future EPS growth rate is 542.10% higher than the Aerospace & Defense industry
Free cash flow (FCF) per share:
$10.41
Balance sheet equity growth per share: 30.15%
Equity growth rate per share is -17451.76% lower than the industry
Debt per share
$93.63
EBITDA per share
$57.19
Valuation Analysis Today of
NOC
P/E Ratio:
13.28
P/E Ratio of Competitors/Peers:
35.07
P/E ratio is -62.14% lower than main peers & is -71.74% lower than the industry
Stock price/value with industry average P/E ratio: $1,704.89
NOC is -72.02% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $188.22
Present value of the expected future dividends only: $147.39
P/S (Price to Sales ratio):
2.09
Price to sales ratio is -78.02% below the industry mean
P/B (Price to book value ratio):
5.55
Price to free cash flow: 45.81
Price to free cash flow ratio is -50.41% lower than the industry
Net income growth rate (3Y):
135.81%
Net income growth rate is 4385.92% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 4.35%
Dividend yeild: 1.35%
Previous Dividend: $1.73
Previous adjusted dividend: $1.73
Previous Dividend: $6.44
Expected next dividend best case: $1.83
Expected next dividend worst case: $1.63
Average dividend payment (long-term): $1.50
Average dividend increase/decrease (growth rate) % per period: 2.83%
Expected next dividend payment date: 13/09/2022
Expected next dividend record date: 29/08/2022
Expected next dividend declaration date: 15/08/2022
Previous dividend payment date: 15/06/2022
Previous dividend record date: 31/05/2022
Previous dividend declaration date: 17/05/2022
Dividend History:
2022-05-27--$1.73
2021-11-26--$1.57
2021-05-28--$1.57
2022-02-25--$1.57
2021-08-27--$1.57
2021-02-26--$1.45
Dividend growth rate is -121.41% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
109.02%
Net debt to equity ratio:
92.71%
Debt to assets ratio:
34.57%
Net debt to assets ratio:
29.40%
Debt-to-asset ratio is -35.58% below industry average
Ability to repay debt:
Interest coverage ratio:
16.57
Interest coverage ratio is 99.23% more than industry average
Looking forward:
Debt growth rate:
-12.07%
Annual debt growth is -113% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.513
Statistical significance of correlation:
NOC has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.541
Stock price is -5.26% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.541
Correlation of price movement with Nasdaq (^IXIC):
0.052
Covariance of price movement with the market:
0.059
Kurtosis
7.567
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.302
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
NOC
Gross Profit Margin Ratio:
84%
Operating Profit Margin Ratio:
10.55%
Operating profit margin is -102.12% lower than the industry
Net Profit Margin Ratio:
84%
Effective Tax Rate:
18.41%
Effective tax rate is -22.41% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
43.39%
Return on equity (ROE) is 447.81% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
13.76%
Return on assets (ROA) is 222.16% higher than the industry
Financial Leverage:
1.5x
Current Ratio:
1.31
Current ratio is -58.76% below industry average
Cash Conversion Cycle (days):
45.5
Cash conversion cycle is -92.09% below industry average
The remaining useful life of property plant & equipment is: 0.6 years
Stock based compensation to net income ratio:
0.31%
In-depth Efficiency Analysis
Revenue generated per employee:
401.2K
Each employee generates 16% more revenue than industry average revenue per employee
EBITDA generated per employee:
100.5K
Each employee generates 168% more EBITDA than industry average revenue per employee
Profit generated per employee:
65.5K
Each employee generates 919% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 8.3K
Each employee generates 258% more free cash flow than industry average revenue per employee
Assets/Capital per employee
344.9K
Each employee generates 258% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
NOC
GENERAL DYNAMICS CORPORATION (XNYS:GD)
EATON CORPORATION PUBLIC LIMITED COMPANY (XNYS:ETN)
WASTE MANAGEMENT, INC. (XNYS:WM)
FEDEX CORPORATION (XNYS:FDX)
JOHNSON CONTROLS INTERNATIONAL PLC (XNYS:JCI)
CANADIAN PACIFIC RAILWAY LIMITED (XNYS:CP)
THOMSON REUTERS CORPORATION (XNYS:TRI)
NORFOLK SOUTHERN CORPORATION (XNYS:NSC)
IHS Markit Ltd. (XNYS:INFO)
Current Analyst Ratings
Strong buy�17%
Buy�25%
Hold�38%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
35.31B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
27.91B
7.40B
-
3.68B
3.68B
-
-
3.68B
-
534.00M
1.25B
8.85B
3.73B
5.77B
7.07B
1.30B
5.77B
Statement of Cash Flow
Date:
Period:
303.00M
Differed Income Tax :
- 201000.00K
Stock Based Compensation :
18.00M
Change in Working Capital :
- 1254000.00K
Accounts Receivables:
- 246000.00K
Other Working Capital:
-
Other Non-Cash Items:
- 309000.00K
Net Cash Provided by Operating Activities:
- 488000.00K
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
2.17B
-
2.17B
7.83B
838.00M
713.00M
11.56B
9.72B
17.52B
533.00M
-
220.00M
2.35B
30.35B
-
41.90B
2.05B
7.00M
-
2.88B
3.92B
8.85B
14.49B
4.97B
19.77B
-
28.62B
156.00M
13.28B
- 146000.0K
-
March 31, 2022 at 6:00:00 AM
31.58B
13.29B
41.90B
-
14.49B
12.3B
-
- 249000.00K
- 249000.00K
-
-
- 318000.00K
- 251000.00K
- 50000.00K
- 619000.00K
-
- 1356000.00K
2.17B
3.53B
- 488000.00K
- 244000.00K
- 732000.00K
Our Proprietary Portfolio Rating
Our Rating:
A
Price Forecast/Expected Price in Next 5 Years of
NOC
2023
2024
2025
2026
2027
$498.96
$1,001.16
$1,042.15
$1,084.81
$1,129.22