NOC
Northrop Grumman Corporation
$555.58
Platform & Compounding FCF
70%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 39.9% above fair value
You pay
$555.58
Bear
$306.69
Fair
$397.19
Bull
$477.04
Bear
$306.69
-44.8%
4% stage 1 growth, 11% discount
Fair
$397.19
-28.5%
6% stage 1 growth, 11% discount
Bull
$477.04
-14.1%
8% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (6% base case)
Terminal Value % of EV
35%
Implied Market Multiple
29.3x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $731.46 from 35 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $397.19 per share.
Warnings
Wall Street's average price target is $731.46 (from 35 analysts). Our estimate is 65% 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