Morningstar

Morningstar, Inc.

Equity Bottom-Up

We assign Northrop Grumman a wide economic moat and a $297 fair value estimate. We think Northrop and Orbital's combined backlog of over $53 billion should translate into top-line growth. The innovation systems unit, as well as Northrop's aerospace systems and mission systems businesses, should drive growth. The F-35 continues to be a revenue driver, but its growth rate is decelerating. We forecast the F-35 to grow at a mid- to high-single-digit rate in 2019, and Northrop has guided to only…

Our fair value estimate for Northrop Grumman remains under review. We expect to transfer coverage to a new analyst in June, at which time we will update our fair value estimate.

We are placing Northrop Grumman under review as we transfer coverage to a new analyst.

<p>The Department of Defense submitted its $718 billion fiscal 2020 budget request to Congress, which represents a 5% increase over fiscal 2019. However, the $247 billion in investment funding (procurement and RDT&amp;E) is more pertinent for defense firms and is slated to only rise 2% year over year. Despite this lackluster growth, the budget is in line with our expectations and as such we're not moving fair values for the contractors we cover. Investors should take away four things: 1) Congress may…</p>

United States

Northrop Grumman Corporation is a global security company. The Company provides systems, products, and solutions in aerospace, electronics, information systems and technical services to government and commercial customers worldwide.

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