NOC
Northrop Grumman Corporation
$484.48
Platform & Compounding FCF
70%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 53.5% above fair value
You pay
$484.48
Bear
$247.87
Fair
$315.58
Bull
$375.33
Bear
$247.87
-48.8%
4% stage 1 growth, 11% discount
Fair
$315.58
-34.9%
6% stage 1 growth, 11% discount
Bull
$375.33
-22.5%
8% stage 1 growth, 11% discount
Adjust Assumptions
6.0%
11.0%
3.0%
Key Value Driver
FCF growth rate (6% base case)
Terminal Value % of EV
35%
Implied Market Multiple
22.3x
Market is pricing in (growth)
10.5%
vs 6.0% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (35 analysts)
$600.62
Divergence from AlphaVal
47%
Summary
Using a two-stage FCF DCF with 6% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $315.58 per share.
Warnings
Wall Street's average price target is $600.62 (from 35 analysts). Our estimate is 47% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions