Northrop Grumman (NOC) recently completed a significant flight test of its Jackal precision strike missile, confirming autonomous, navigational, and propulsion systems readiness. This development is something that investors may weigh alongside the stock's past 3 months decline.

Alongside the Jackal test, Northrop Grumman’s share price has fallen about 26% over the past 3 months and is down 7.43% year to date. Its 1 year total shareholder return is 12.73%, indicating longer term holders have seen gains despite recently fading momentum.

If news like the Jackal test has you thinking about other defense and infrastructure themes, you might want to scan 34 power grid technology and infrastructure stocks.

After a sharp 3 month slide, but solid 1 year and multi year total returns, plus ongoing programs across space, aeronautics and missiles, you have to ask: is NOC now on sale, or is future growth already priced in?

Most Popular Narrative: 22.2% Undervalued

Northrop Grumman's most followed valuation narrative puts fair value at $696.95, well above the recent $542.14 close. The story centers on whether that gap is justified by future contracts and earnings power.

The ramp-up of advanced autonomous and integrated systems such as Beacon and IBCS, combined with ongoing investments in solid rocket motor capacity (targeting a near-doubling by 2029), positions the company to capitalize on high-growth, higher-margin market segments, thereby enhancing future operating margins and underlying cash flow.

Curious what revenue path and margin profile underpin that higher fair value, and how long earnings are projected to hold steady before any step up appears? The narrative leans on a detailed set of growth, profitability and valuation assumptions that do not line up neatly with the recent share price slide. The tension between those two views is where the most interesting numbers sit.

Result: Fair Value of $696.95 (UNDERVALUED)

However, the story can break if major U.S. defense programs face budget cuts or delays, or if large fixed price projects run into cost overruns that pressure margins.

Wall Street's queuing for one rocket. While SpaceX counts down to its IPO, other companies tied to the new space race are already in orbit. → 20 Compelling Space Companies watchlist · Global Space Race Investing Ideas screener · Scan the sector by valuation on Rocket Lab's valuation page.

Another View: What If The Cash Flows Are Already Priced In?

Analysts see Northrop Grumman as 22.2% undervalued based on a $696.95 price target. Yet Simply Wall St's DCF model points to a fair value of $521.82, slightly below the current $542.14 price. This suggests the projected cash flows may already be reflected, so which story feels closer to your own assumptions?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Northrop Grumman for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 47 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If all of this seems balanced between opportunity and concern, take a moment now to review the data yourself and stress test your thesis using the 4 key rewards and 1 important warning sign.

Looking For More Investment Ideas?

If NOC has sharpened your focus on where to put fresh capital next, do not stop here. Broaden your watchlist with a few targeted screens.

• Spot potential mispricings early by scanning 47 high quality undervalued stocks that combine quality fundamentals with room for sentiment to catch up.
• Strengthen your income stream by checking out 9 dividend fortresses that put cash returns front and center.
• Lower the temperature on portfolio risk by reviewing 63 resilient stocks with low risk scores before the crowd starts paying attention.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.