Northrop Grumman (NOC) opened 2026 with Q1 revenue of US$9.9 billion and basic EPS of US$6.16, against Q1 2025 revenue of US$9.5 billion and EPS of US$3.33, while trailing twelve month EPS stands at US$32.03 on revenue of US$42.4 billion. Over that same trailing period, net profit margin was 10.8% compared with 9.2% in the prior year. This latest print lands in the context of firmer profitability and puts the focus squarely on how durable these margins prove to be.

See our full analysis for Northrop Grumman.

With the numbers on the table, the next step is to see how they line up against the most common stories around Northrop Grumman, highlighting where the prevailing narratives hold up and where they start to look stretched.

Margins Settle Above 10% on TTM Basis

• Over the last 12 months, Northrop Grumman generated US$42.4b of revenue and US$4.6b of net income, which works out to a 10.8% net profit margin compared with 9.2% in the prior year period.
• Consensus narrative points to stronger program execution and higher margin work, and the recent move from a 9.2% to 10.8% margin interacts with that view in a few ways:
  • Supporters of the bullish view highlight leadership in next generation platforms like B 21 and Sentinel, and the 10.8% margin is consistent with the idea that these programs can support profitability as they progress.
  • At the same time, the forecast that margins could move from about 10% to 9.2% over several years means the current 10.8% level sits above that assumption, so readers may want to watch how newer contracts and cost profiles affect this margin line.

EPS Near US$32 on Trailing Basis

• Trailing twelve month basic EPS sits at about US$32.03, up from US$29.14 a year earlier, while quarterly EPS over the last five periods has ranged from US$3.33 to US$9.99.
• Bulls often focus on earnings stability from a long backlog and large defense programs, and the EPS pattern here gives a mixed message for that argument:
  • On one hand, EPS of US$32.03 on a trailing basis and 23.3% earnings growth over the past year align with the bullish idea that elevated defense budgets and better program execution can support profit generation.
  • On the other hand, the data also shows five year earnings declining at about 9.3% per year historically, so the recent EPS level and growth rate do not fully settle the bearish concern that long term earnings trends have been weaker than the latest year suggests.

On these numbers, bulls and bears are looking at the same EPS trend and coming to very different conclusions about what comes next, which is exactly what this earnings season debate is circling around right now. 🐂 Northrop Grumman Bull Case

P/E Discount vs Peers With DCF Gap

• The shares trade on a trailing P/E of 18.3x at a price of US$589.62, compared with analyst price targets of US$727.51, while the DCF fair value in the dataset is US$498.71.
• Bears argue that dependence on large, complex programs and ongoing capital investment can pressure returns, and the current valuation metrics reflect some of those concerns:
  • The stock sits below peer and industry P/E averages of 37.2x and 37.8x even after a year of 23.3% earnings growth, which fits the cautious view that investors are not willing to pay peer level multiples while longer term earnings have declined at 9.3% per year.
  • The DCF fair value of US$498.71 is below the share price of US$589.62, so anyone leaning bearish can point to that gap even though analysts have set a higher price target of US$727.51, showing how the same set of cash flow and earnings expectations can be read more conservatively.

Skeptics are likely to focus on the DCF fair value sitting below the market price and the weaker five year earnings trend when they argue that the current P/E discount is not automatically a bargain. 🐻 Northrop Grumman Bear Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Northrop Grumman on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

With the bullish and bearish stories laid out, the real question is where you land on that spectrum. Take a closer look at the full data and move quickly to shape your own view by weighing the company's 5 key rewards and 2 important warning signs.

See What Else Is Out There

Northrop Grumman carries a trailing P/E below peers alongside a DCF value under its share price and a five year earnings trend that has been weaker.

If that mix of valuation doubt and softer long term earnings leaves you cautious, compare it with companies screened for stronger upside potential using the 61 high quality undervalued stocks.

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.