EPS of $8.66 increased by 344.6% from previous year
Gross margin of 18.1%
Net income of 1.26B
"Kathy Warden, CEO: "We are harnessing our investments to manufacture at scale the integrated hardware and software solutions that give our customers an advantage."" - Kathy Warden
Northrop Grumman Corporation (NOC) demonstrated strong financial performance in Q4 2024, achieving a revenue of $10.686 billion, reflecting a quarterly growth of 6.9% and a year-over-year increase of 0.45%. Management highlighted an impressive backlog of approximately $91.5 billion, supported by significant new competitive wins and follow-on awards. The company recorded a notable increase in free cash flow, which grew by 25% year-over-year to over $2.6 billion, at the high-end of guidance. The outlook for 2025 remains optimistic, with expectations for continued organic growth of 3% to 4%, further margin expansion, and double-digit free cash flow growth again in 2025. This results from an unwavering commitment to operational excellence and strategic investments in technology and efficiency.
Key Performance Indicators
Revenue
10.69B
QoQ: 6.90% | YoY:0.45%
Gross Profit
1.93B
18.08% margin
QoQ: -8.26% | YoY:298.35%
Operating Income
1.19B
QoQ: 6.52% | YoY:403.56%
Net Income
1.26B
QoQ: 23.20% | YoY:336.26%
EPS
8.66
QoQ: 23.36% | YoY:344.63%
Revenue Trend
Margin Analysis
Key Insights
**Revenue:** $10.686 billion (up 6.9% QoQ, up 0.45% YoY)
**Net Income:** $1.264 billion (up 23.2% QoQ, up 336.26% YoY)
**EPS:** $8.66 (up 23.36% QoQ, up 344.63% YoY)
**Free Cash Flow:** $2.578 billion (up 25% YoY)
**Gross Profit Margin:** 18.07% (up from 15.16% in Q3 2024)
Margins:
- Gross Profit Margin: 18.07% (up from 15.16% in Q3 2024)
- Operating Income Margin: 11.14% (consistent with previous quarters)
- Net Profit Margin: 11.85% (up from 9.59% in Q3 2024)
Balance Sheet Strength:
- Total Assets: $49.359 billion
- Total Liabilities: $34.069 billion
- Cash & Cash Equivalents: $4.353 billion
1. Strong Demand for Capabilities:
Kathy Warden, CEO, stated: "Our proven ability to grow backlog and deliver key capabilities to our customers has led to another year of strong top-line growth, with 2024 sales up more than 4%, building on the momentum over the last five years, where our top line has grown by 30% organically."
2. Operational Excellence and Margin Expansion:
Ken Crews, CFO, emphasized: "Margins improved due to the proactive steps we've taken to further enhance performance and drive efficiencies across our business. This performance led to an increase in net favorable earnings adjustments, totaling $350 million for the year."
3. Focus on Cash Flow Management:
Warden noted: "Our free cash flow performance for the year was outstanding, increasing 25% year-over-year to over $2.6 billion at the high-end of our guidance range."
Kathy Warden, CEO: "We are harnessing our investments to manufacture at scale the integrated hardware and software solutions that give our customers an advantage."
— Kathy Warden
Ken Crews, CFO: "We continue to see robust and enduring demand for our capabilities in both domestic and international markets."
— Ken Crews
Forward Guidance
Northrop Grumman expects 2025 to continue the growth trajectory with guidance for organic sales growth of 3% to 4%, driven by a diversified portfolio and operational efficiencies. The company anticipates double-digit free cash flow growth again in 2025, maintaining a robust position to reinvest back into the business and return value to shareholders.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
NOC Focus
18.08%
10.20%
8.27%
13.64%
RTX
19.60%
9.76%
2.46%
26.00%
GD
15.60%
10.70%
5.20%
15.69%
BA
-10.40%
-24.70%
98.90%
-8.22%
LHX
25.30%
10.30%
2.32%
21.95%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Northrop Grumman presents a solid investment opportunity within the aerospace and defense sector. The company’s positive financial metrics, including substantial backlog, strong cash flow, and commitment to innovation, position it well against peers like Raytheon Technologies (RTX) and Lockheed Martin (LMT). Given the expected growth in defense spending and the company's strategic focus on both domestic and international markets, investors should monitor developments in defense budgets, international contracts, and product innovations closely.
Key Investment Factors
Growth Potential
Northrop Grumman's potential for growth is supported by a strong backlog of $91.5 billion, with management indicating a focus on delivering critical deterrence capabilities and differentiated technology, particularly in international markets.
Profitability Risk
Key risks include potential budget cuts in defense spending, shifts in government procurement strategies, and challenges associated with integrating new technologies into existing systems.
Financial Position
The company's balance sheet remains robust with $4.35 billion in cash and cash equivalents, a current ratio of 1.01, and manageable debt levels, further supported by positive cash flow generation.
SWOT Analysis
Strengths
Strong backlog of $91.5 billion
Diverse portfolio across aerospace and defense
Robust cash flow generation and liquidity
Weaknesses
Potential risks tied to defense budgets and government spending changes
Reliance on a few major contracts for a significant portion of revenue
Opportunities
Expanding international sales and partnerships
Increased demand for advanced technologies and missile defense systems
Threats
Competitive pressures in the defense sector
Global geopolitical uncertainties affecting defense expenditures