NOC Financial Analysis

Analysis Date: 1/31/2025

Business Model

Northrop Grumman generates revenue through four main segments: Aeronautics Systems, Defense Systems, Mission Systems, and Space Systems

Revenue Sources

• Aeronautics Systems - Aircraft, autonomous systems and aerospace products (29% of revenue)
• Defense Systems - Strategic deterrence, weapons and missile defense (21% of revenue)
• Mission Systems - Mission solutions, communications and electronics (28% of revenue)
• Space Systems - Space and launch systems (22% of revenue)

Revenue Distribution by Channel

• U.S. Government contracts represent substantial majority of revenue

Income Statement Analysis

• Revenue flat year-over-year in Q4 but full year 2024 up 4.4% to $41B
• Operating income increased significantly due to prior year B-21 charge
• Operating margin expanded to 10.2% from -3.7% in Q4 2023

Balance Sheet Analysis

• Strong cash position with $4.4B at year end
• Total assets increased 6% year-over-year

Cash Flow Analysis

• Free cash flow up 25% for full year 2024 to $2.6B
• Strong Q4 cash generation from improved working capital

Capital Allocation

Company plans balanced capital deployment with $1.5B in planned 2025 capex and returning 100% of free cash flow to shareholders through dividends and share repurchases

Management Commentary

Record backlog of $91.5B with book-to-bill of 1.23x

International growth accelerating with 1.4x book-to-bill

Improved operational efficiency driving margin expansion

Overall Sentiment: Confident and optimistic about growth trajectory and operational performance

Recommendation

Rating: Buy

Reason for Rating: Strong backlog, margin expansion and cash flow growth support positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/31/2025, 7:50:00 AM