NOC
Northrop Grumman Corp
Industrial/Transportation
04/06/2015
Presented
| Date | 03/31/2015 |
| Price | $160.96 |
| Market Cap | $31.90B |
| Ent Value | $34.00B |
| P/E Ratio | 16.5x |
| Book Value | $36.37 |
| Div Yield | 1.74% |
| Shares O/S | 198.41M |
| Ave Daily Vol | 1,600,000 |
| Short Int | 1.63% |
Current
| Price | $526.93 |
| Market Cap | $77.06B |
| Northrop Grumman Corporation, a security company, provides systems, products, and solutions in aerospace, electronics, information systems, and technical service areas to government and commercial customers worldwide. The company’s Aerospace Systems segment designs, develops, integrates, and produces manned aircraft, unmanned systems, spacecraft, high-energy laser systems, microelectronics, and other systems and subsystems. This segment sells its products primarily to government agencies for use in various areas, including intelligence, surveillance, and reconnaissance; communications; battle management; strike operations; electronic warfare; earth observation; satellite communications; space science; and space exploration. Its Electronic Systems segment offers solutions for sensing, understanding, anticipating, and controlling operating environment to military, civil, and commercial customers. This segment provides various defense electronics and systems, airborne fire control radars, situational awareness systems, early warning systems, electronic warfare systems, air defense radars and management systems, navigation systems, communications systems, marine power and propulsion systems, space systems, and logistics services. The company’s Information Systems segment offers advanced solutions for Department of Defense, national intelligence, federal civilian, state, international, and commercial customers. This segment provides products and services primarily in the fields of command and control, communications, cybersecurity, air and missile defense, intelligence processing, civil security, health information technology, and government support systems. Its Technical Services segment provides logistics, modernization, and sustainment support; and other advanced technology and engineering services, including space, missile defense, nuclear security, training, and simulation services. The company was founded in 1939 and is based in Falls Church, Virginia. |
Publicly traded companies mentioned herein: Boeing Co (BA), General Dynamics Corporation (GD), Lockheed Martin Corp (LMT), Northrop Grumman Corporation (NOC), Raytheon Company (RTN)
Highlights
The presenter is bullish on the Defense Sector, and thinks shares of Northrop Grumman (NOC) are particularly attractive in the high-$150s/ low $160s following a pull-back from recent highs ($172 in early February). The ~8% FCF yield is attractive, and the political backdrop is constructive for a number of reasons. Generally speaking, he believes many investors - including the hedge fund community - are looking past a top performing stock (+9% year-to-date, +22% in 2014, and +40% in 2013) due largely to the opacity of government/ Department of Defense (DoD) contracts. Using a "reasonable" FCF yield assumption of 7% on the presenter’s 2016 estimates suggests a more fair value for the stock is in the $190 - $200 range, and a case can be made for $200+ should NOC win the new stealth bomber contract.
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