Buffett Brain · Research note
Score updated 29 Oct 2026 · analysis from 11 Aug 2026
NOC· Industrials
Northrop Grumman
Northrop Grumman's inconsistent profitability and below-average margins signal potential risks that outweigh its strengths.
Buffett fit
Weak fit
Owner
26
Durability
45
Management
75
Price
45
Score updated 29 Oct 2026 · analysis from 11 Aug 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Industrials stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned Northrop Grumman entirely, I would focus on improving margins and exploring new markets to enhance growth.
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The 10-year outlook shows potential vulnerabilities, particularly if government defense spending contracts or if competitors innovate more rapidly.
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Northrop Grumman has shown discipline with a share count CAGR of -2.59% and a yield of 2.73%.
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With an yield of 4.16% and a of 17.4, the valuation does not provide a sufficient compared to the ideal 8-10% yield.
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- The full reasoning behind all four pillars
- The 5-year price target and the return it implies
- What would change the call
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 15-year growth of 26.17% indicates strong cash generation capabilities.
- 2Northrop Grumman has a solid interest coverage ratio of 8.6, suggesting good ability to meet debt obligations.
- 3The company has been profitable in all of the last five years, providing some stability.
- 4A share count CAGR of -2.59% demonstrates a commitment to returning capital to shareholders.
Concerns
5- 1 of 19.8% sits well below the sector's top-quintile cutoff of 43.4%, indicating competitive weaknesses.
- 2 of 10.2% is also below the sector's top-quintile cutoff of 17.8%, suggesting profitability challenges.
- 3The 5-year EPS CAGR of -2.59% raises questions about future growth potential.
- 4Net debt/EBITDA of 1.75 indicates a relatively high debt burden that could pose risks in downturns.
Price history
$562+54.3%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Northrop Grumman operates in the aerospace and defense sector, generating $41.95B in revenue primarily through defense contracts. The company maintains a diverse portfolio across four segments, but its of 19.8% lags significantly behind the sector's top-quintile cutoff of 43.4%. The cash generation is solid, with of $3.31B, illustrating decent unit economics despite margin pressures.
How this analysis has moved
The call has held across 6 reviews.
Sep 27, 2026 → Oct 29, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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