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Is Northrop Grumman (NOC) Stock Undervalued Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is Northrop Grumman (NOC). NOC is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 14.58 right now. For comparison, its industry sports an average P/E of 20.45. Over the past year, NOC's Forward P/E has been as high as 15.29 and as low as 11.86, with a median of 13.34.

We also note that NOC holds a PEG ratio of 1.67. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NOC's PEG compares to its industry's average PEG of 2.17. NOC's PEG has been as high as 1.71 and as low as 1.63, with a median of 1.67, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Northrop Grumman is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, NOC feels like a great value stock at the moment.


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