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NOC Outperforms Industry in the Past Year: Should You Buy the Stock?
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Key Takeaways
Northrop Grumman gained 14% in the past year, topping the Aerospace-Defense industry growth.
NOC advanced XRQ-73 flight testing and secured a U.S. Army ITDS development contract.
NOC trades below industry valuation levels, though earnings estimates have declined.
Northrop Grumman (NOC - Free Report) stock has risen 14% in the past year, outperforming both the Zacks Aerospace-Defense industry’s growth of 9.2% and the broader Zacks Aerospace sector’s gain of 13.8%. However, it came below the S&P 500’s return of 35.4% in the same time frame.
Image Source: Zacks Investment Research
Other industry players, such as Huntington Ingalls Industries (HII - Free Report) and General Dynamics (GD - Free Report) , have also delivered a similar stellar performance in the past year. Shares of HII and GD have risen 36.6% and 28.4%, respectively, in the said period.
Given NOC’s strong recent performance, some investors may feel inclined to buy the stock quickly. However, it is important to evaluate whether the company’s fundamentals can support sustainable long-term growth or if the recent rally is temporary. A clear understanding of NOC’s growth outlook and associated risks is essential for making a well-informed investment decision.
Tailwinds for NOC
NOC’s share gains in recent months appear to be supported by its strong financial performance, recent contract wins and technology developments. In April 2026, NOC reported solid results, with net sales of $9.88 billion, up 4.4% year over year. The company’s adjusted earnings of $6.14 per share also increased 1.3% from the prior-year level.
In May 2026, NOC announced that its XRQ-73 hybrid-electric uncrewed aircraft started flight testing at Edwards Air Force Base in California. Developed for DARPA’s SHEPARD program, the aircraft is designed to support next-generation propulsion technology for lightweight autonomous aircraft. Its hybrid-electric system aims to improve fuel efficiency, reduce emissions and increase operational flexibility for future missions.
Earlier in the month, NOC won a U.S. Army contract for the second phase development of its Improved Threat Detection System (ITDS). The award followed successful flight tests during the first phase, where the company’s technology demonstrated strong threat detection capabilities. The ITDS is expected to improve aircraft survivability and help Army crews respond more effectively to evolving threats.
Moreover, NOC was selected by the Commonwealth of Australia to participate in discussions related to establishing solid rocket motor manufacturing capabilities in Australia. The initiative is aimed at expanding local defense manufacturing while providing Australia access to NOC’s advanced propulsion technologies.
For defense contractors like Northrop Grumman, continued technology advancements, military development programs and international defense partnerships remain important growth drivers.
Estimates for NOC’s 2026 Sales and Earnings
The Zacks Consensus Estimate for NOC’s 2026 sales implies year-over-year growth of 4.7%. The consensus estimate for its 2026 earnings indicates a year-over-year increase of 6.3%.
Image Source: Zacks Investment Research
The downward revision in its 2026 and 2027 earnings over the past 60 days suggests investors’ decreasing confidence in this stock’s earnings generation capabilities.
Image Source: Zacks Investment Research
NOC’s Valuation
In terms of valuation, NOC’s forward 12-month price-to-earnings (P/E) is 19.52X, a discount to the industry average of 32.24X. This suggests that investors will be paying a lower price than the company's expected earnings growth compared with its industry average.
Image Source: Zacks Investment Research
Huntington is trading at a discount in comparison with NOC. HII’s forward 12-month P/E is 17.80X, while General Dynamics’ forward 12-month P/E is 20.48X.
Liquidity Position of NOC
NOC has a current ratio of 1.15. The ratio, being more than one, indicates that NOC possesses sufficient capital to pay off its short-term debt obligations.
Its industry peers, Huntington and General Dynamics, also maintain current ratios above one. HII has a current ratio of 1.19, while GD holds 1.38.
Risks to Take Note of Before Choosing NOC
Rising economic tensions and shifting trade policies — especially new U.S. tariffs and retaliatory measures — could affect the global defense market. Recent legal changes led the United States to replace certain tariffs (previously under IEEPA) with new ones, including a 10% global tariff. The overall impact is uncertain and depends on factors like how long tariffs last, possible exemptions or reversals, and responses from other countries. Despite these uncertainties, the company believes that it is monitoring the situation and does not expect tariffs to have a significant negative impact on the business.
What Should an Investor do Now?
Given NOC’s discounted valuation and strong liquidity position, the stock appears reasonably valued with stable long-term prospects. However, declining earnings estimates and ongoing challenges may weigh on near-term performance. Existing investors may consider holding the stock, while new investors could wait for better earnings visibility before taking a position.
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NOC Outperforms Industry in the Past Year: Should You Buy the Stock?
Key Takeaways
Northrop Grumman (NOC - Free Report) stock has risen 14% in the past year, outperforming both the Zacks Aerospace-Defense industry’s growth of 9.2% and the broader Zacks Aerospace sector’s gain of 13.8%. However, it came below the S&P 500’s return of 35.4% in the same time frame.
Image Source: Zacks Investment Research
Other industry players, such as Huntington Ingalls Industries (HII - Free Report) and General Dynamics (GD - Free Report) , have also delivered a similar stellar performance in the past year. Shares of HII and GD have risen 36.6% and 28.4%, respectively, in the said period.
Given NOC’s strong recent performance, some investors may feel inclined to buy the stock quickly. However, it is important to evaluate whether the company’s fundamentals can support sustainable long-term growth or if the recent rally is temporary. A clear understanding of NOC’s growth outlook and associated risks is essential for making a well-informed investment decision.
Tailwinds for NOC
NOC’s share gains in recent months appear to be supported by its strong financial performance, recent contract wins and technology developments. In April 2026, NOC reported solid results, with net sales of $9.88 billion, up 4.4% year over year. The company’s adjusted earnings of $6.14 per share also increased 1.3% from the prior-year level.
In May 2026, NOC announced that its XRQ-73 hybrid-electric uncrewed aircraft started flight testing at Edwards Air Force Base in California. Developed for DARPA’s SHEPARD program, the aircraft is designed to support next-generation propulsion technology for lightweight autonomous aircraft. Its hybrid-electric system aims to improve fuel efficiency, reduce emissions and increase operational flexibility for future missions.
Earlier in the month, NOC won a U.S. Army contract for the second phase development of its Improved Threat Detection System (ITDS). The award followed successful flight tests during the first phase, where the company’s technology demonstrated strong threat detection capabilities. The ITDS is expected to improve aircraft survivability and help Army crews respond more effectively to evolving threats.
Moreover, NOC was selected by the Commonwealth of Australia to participate in discussions related to establishing solid rocket motor manufacturing capabilities in Australia. The initiative is aimed at expanding local defense manufacturing while providing Australia access to NOC’s advanced propulsion technologies.
For defense contractors like Northrop Grumman, continued technology advancements, military development programs and international defense partnerships remain important growth drivers.
Estimates for NOC’s 2026 Sales and Earnings
The Zacks Consensus Estimate for NOC’s 2026 sales implies year-over-year growth of 4.7%. The consensus estimate for its 2026 earnings indicates a year-over-year increase of 6.3%.
Image Source: Zacks Investment Research
The downward revision in its 2026 and 2027 earnings over the past 60 days suggests investors’ decreasing confidence in this stock’s earnings generation capabilities.
Image Source: Zacks Investment Research
NOC’s Valuation
In terms of valuation, NOC’s forward 12-month price-to-earnings (P/E) is 19.52X, a discount to the industry average of 32.24X. This suggests that investors will be paying a lower price than the company's expected earnings growth compared with its industry average.
Image Source: Zacks Investment Research
Huntington is trading at a discount in comparison with NOC. HII’s forward 12-month P/E is 17.80X, while General Dynamics’ forward 12-month P/E is 20.48X.
Liquidity Position of NOC
NOC has a current ratio of 1.15. The ratio, being more than one, indicates that NOC possesses sufficient capital to pay off its short-term debt obligations.
Its industry peers, Huntington and General Dynamics, also maintain current ratios above one. HII has a current ratio of 1.19, while GD holds 1.38.
Risks to Take Note of Before Choosing NOC
Rising economic tensions and shifting trade policies — especially new U.S. tariffs and retaliatory measures — could affect the global defense market. Recent legal changes led the United States to replace certain tariffs (previously under IEEPA) with new ones, including a 10% global tariff. The overall impact is uncertain and depends on factors like how long tariffs last, possible exemptions or reversals, and responses from other countries. Despite these uncertainties, the company believes that it is monitoring the situation and does not expect tariffs to have a significant negative impact on the business.
What Should an Investor do Now?
Given NOC’s discounted valuation and strong liquidity position, the stock appears reasonably valued with stable long-term prospects. However, declining earnings estimates and ongoing challenges may weigh on near-term performance. Existing investors may consider holding the stock, while new investors could wait for better earnings visibility before taking a position.
NOC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.