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For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in Northrop Grumman (NOC) ten years ago? It may not have been easy to hold on to NOC for all that time, but if you did, how much would your investment be worth today?
Northrop Grumman's Business In-Depth
With that in mind, let's take a look at Northrop Grumman's main business drivers.
Originally formed in 1939 as Northrop Aircraft Incorporated and reincorporated in Delaware in 1985 as Northrop Corporation was a principal developer of flying wing technology. In 1994, the company acquired Grumman Corporation (Grumman), after which the company was renamed Northrop Grumman Corporation. Currently, this global security company supplies a broad array of products and services to the U.S. Department of Defense (DoD) including electronic systems, information technology, aircraft, space technology and systems integration services. Northrop Grumman has realigned its business units effective January 2020.
Northrop Grumman's Aeronautics Systems unit focuses on the development, integration, production and support of manned aircraft and autonomous systems. Revenues during 2020 came in at $12,169 million, contributing 33.1% to the company’s total revenues.
Its Defense Systems unit focuses on mission readiness along with battle management and missile systems. Revenues during 2020 came in at $7,543 million, contributing 20.5% to the company’s total revenues.
The company's Mission Systems unit includes airborne sensors and networks, cyber and intelligence mission solutions, maritime/land systems and sensors, along with navigation, targeting and survivability. Revenues during 2020 came in at $10,080 million, contributing 27.4% to the company’s total revenues.
Its Space Systems unit focuses on launch and strategic missiles as well as varied space related products that Northrop manufactures. Revenues during 2020 came in at $8,744 million, contributing 23.8% to the company’s total revenues.
However, total revenues of $36,799 million in 2020 were adjusted for intersegment eliminations of up to $1,737 million.
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Northrop Grumman a decade ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in May 2011 would be worth $5,667.03, or a gain of 466.70%, as of May 12, 2021, according to our calculations. This return excludes dividends but includes price appreciation.
In comparison, the S&P 500 gained 209.38% and the price of gold went up 17.43% over the same time frame.
Looking ahead, analysts are expecting more upside for NOC.
Northrop Grumman ended first-quarter of 2021 on an encouraging note, with both earnings and revenues exceeding their respective Zacks Consensus Estimate. As a major U.S. defense contractor, Northrop Grumman enjoys a strong position in the Air Force, Space & Cyber Security programs. Its product line is well positioned in high priority categories, which enables it to clinch notable contracts from the Pentagon. However, a comparative analysis of its historical EV/Sales ratio reflects a relatively gloomy picture that might be a cause concern for investors. It fears that continued spread of COVID-19 might cause extended disruption in its supply chain. Economic tensions and changes in international trade policies, including higher tariffs on imported goods might hurt the stock. Its shares have underperformed the industry in the past year.
The stock is up 8.77% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 5 higher, for fiscal 2021. The consensus estimate has moved up as well.
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