NOC
Northrop Grumman Corporation
Industrials · Aerospace & Defense · United States · Stock
Score Breakdown
Scored for Dividend Income profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- The dividend factor was a standout contributor, reflecting four consecutive years of dividend-per-share growth and a conservative 30.9% payout ratio that signals sustainability.
- Solid profitability metrics — 10.8% operating margin, 10.0% net margin, and 8.1% return on assets — and manageable leverage supported mid-range scores in profitability and financial health.
- Growth was incremental rather than accelerating, with revenue up only +2.2% and net income nearly flat at +0.2%, which tempered the overall composite to 59.9/100.
Why Not Higher
- The theme factor scored zero despite Northrop Grumman's assignment to both Defense Spending and Space Economy macro themes, which weighed on the composite score.
- The sharp deceleration in quarterly operating income from $1,425,000,000 in 2025Q2 to $989,000,000 in 2026Q1, combined with near-flat annual net income growth, limited the momentum and growth scores.
Data Confidence
10 / 10
Very High — full data coverage
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew from FY2024's $41,033,000,000 to FY2025's $41,954,000,000, a gain of +2.2%, while net income was nearly flat at +0.2% (FY2024: $4,174,000,000 to FY2025: $4,182,000,000), and diluted EPS rose +2.6% from FY2024's $28.34 to FY2025's $29.08.
The model rewarded modest top-line and per-share expansion but tempered the score given the near-stagnant net income growth, reflecting incremental rather than accelerating progress across all three metrics.
In FY2025, Northrop Grumman posted a net margin of 10.0%, an operating margin of 10.8%, and a return on assets of 8.1%.
The model recognized solid double-digit operating and net margins alongside a meaningful return on assets, reflecting a profitable business, though there remains room relative to the highest-scoring tier.
In FY2025, the debt-to-equity ratio stood at 0.94, interest coverage (operating income divided by interest expense) was 6.8, and total assets were $51,377,000,000.
The model recognized a manageable leverage level and adequate interest coverage, suggesting the company can service its debt comfortably, while the large asset base provides scale context; the mid-range score reflects a balance between these strengths and the leverage present.
Quarterly revenue trended upward from 2025Q2's $10,351,000,000 through a peak of $11,712,000,000 in 2025Q4 before pulling back to $9,881,000,000 in 2026Q1. Operating income similarly peaked in 2025Q2 at $1,425,000,000 and declined to $989,000,000 by 2026Q1, with net income following a comparable arc from $1,174,000,000 in 2025Q2 to $875,000,000 in 2026Q1.
The model rewarded the strong mid-period performance and overall elevated revenue run-rate across the trailing four quarters, while the deceleration into 2026Q1 likely prevented a higher score.
Dividends per share have risen consistently from FY2022's $6.76 to FY2023's $7.34, FY2024's $8.05, and FY2025's $8.99, while the FY2025 dividend payout ratio stood at a conservative 30.9% of net income.
The model rewarded the unbroken multi-year dividend growth streak alongside a low payout ratio, which signals both commitment to returning capital and ample room to sustain or increase the dividend from earnings.
Northrop Grumman is assigned to the macro themes of Defense Spending and Space Economy.
Although the company carries two prominent macro theme assignments, this assignment did not translate into score under the model's current methodology for this factor.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Northrop Grumman posted modest top-line growth of +2.2% to $41,954,000,000 in FY2025, with net income nearly flat at +0.2% and diluted EPS rising +2.6% to $29.08, reflecting incremental rather than accelerating progress. The company maintains solid profitability with a 10.8% operating margin and 10.0% net margin, supported by a manageable debt-to-equity ratio of 0.94 and interest coverage of 6.8x. A consistent dividend growth streak from $6.76 in FY2022 to $8.99 in FY2025, paired with a conservative 30.9% payout ratio, stands out as a clear strength, while quarterly momentum showed a notable deceleration into 2026Q1. The composite score of 59.9/100 with a High risk rating and a 'Research Further' label reflects a business with genuine strengths but meaningful uncertainties warranting deeper investigation.
Plain English
Northrop Grumman is a large defense and space company that grows slowly but pays a steadily rising dividend and keeps its debt at a manageable level — it scored 59.9 out of 100, meaning it has real strengths but also enough question marks that you'd want to dig deeper before drawing conclusions.
Bull Case vs. Bear Case
Bull Case
- Northrop Grumman has raised its dividend every year from $6.76 in FY2022 to $8.99 in FY2025, while keeping the payout ratio at a conservative 30.9%, signaling both commitment to shareholders and ample room to continue growing the dividend.
- The company maintains solid double-digit operating and net margins of 10.8% and 10.0% respectively in FY2025, alongside a return on assets of 8.1%, reflecting a durably profitable business at scale.
- Quarterly revenue reached a peak of $11,712,000,000 in 2025Q4, demonstrating the company's capacity for elevated revenue performance even if that pace did not hold into 2026Q1.
Bear Case
- Net income growth was nearly flat at just +0.2% year-over-year in FY2025, suggesting that top-line gains are not translating into meaningful bottom-line expansion.
- Quarterly operating income declined from $1,425,000,000 in 2025Q2 to $989,000,000 in 2026Q1, and net income fell from $1,174,000,000 to $875,000,000 over the same period, indicating a meaningful deceleration heading into the most recent reporting period.
- Despite being assigned to two prominent macro themes — Defense Spending and Space Economy — the theme factor scored zero under the model's current methodology, meaning those tailwinds did not contribute to the composite score.
What Could Change the Picture
Bullish Triggers
- A sustained reacceleration in quarterly revenue and operating income beyond the 2025Q4 peak of $11,712,000,000 and $1,271,000,000 respectively would signal that the 2026Q1 pullback was temporary rather than structural.
- Continued dividend increases beyond the FY2025 level of $8.99 per share while maintaining a low payout ratio would reinforce the company's financial discipline and capital return commitment.
Bearish Triggers
- If operating income continues to decline from the $989,000,000 reported in 2026Q1, it could pressure the company's ability to sustain its dividend growth streak and service its debt comfortably.
- A deterioration in the debt-to-equity ratio beyond the current 0.94 or a decline in interest coverage below the current 6.8 would raise concerns about financial flexibility given the already-present leverage.
Risk Profile
High RiskThe company carries a debt-to-equity ratio of 0.94 with interest coverage of 6.8, indicating manageable but present leverage that leaves limited buffer if earnings deteriorate. The deceleration in quarterly net income from $1,174,000,000 in 2025Q2 to $875,000,000 in 2026Q1 adds to the uncertainty, contributing to the High risk rating.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.