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    Northrop Grumman (NOC) Stock May Be 24% Undervalued On Sentinel Missile Progress

    Simply Wall St·09/23/2026 19:34:32
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    Northrop Grumman has pulled back in recent months, even after a strong multiyear run. This puts a fresh spotlight on whether the current share price lines up with the cash the business is expected to generate. With high profile defense programs back in the headlines, the question for you is how much of that future cash flow story is already embedded in the valuation.

    • Over the past 5 years, Northrop Grumman has returned 54.3%, so any reassessment of its cash flows now has real weight for long term holders who have already seen a sizable gain.
    • Recent progress on programs like the Sentinel missile, new space domain awareness satellites and advanced air defense projects can influence expectations for future contract visibility, funding timing and ultimately the durability of cash inflows to the company.
    • If you'd rather focus on earnings, this one's for you. See what Northrop Grumman's 16.1x P/E says about the price.

    The stock's next move may depend on whether that recent share price, after the pullback, is fully supported by the cash flows implied by its intrinsic value under the Discounted Cash Flow (DCF) approach.

    If you want to test this same cash flow question beyond Northrop Grumman, compare it with 29 high quality undervalued stocks.

    Is Northrop Grumman a Bargain on Cash Flow?

    The 2 Stage Free Cash Flow to Equity Discounted Cash Flow (DCF) model here focuses on what Northrop Grumman can return to shareholders over time in hard cash. On the latest figures, the business generated roughly $3.40b of free cash flow over the last twelve months, and analysts and internal estimates point to that moving higher into the early 2030s rather than shrinking.

    Those projections show free cash flow in the mid 3b range later this decade and then stepping up into the 4b to 6b area as the second stage of the model kicks in, which supports a maturing but still growing cash profile. Because the DCF output sits meaningfully above the current share price of $509.86, the market is treating Northrop Grumman's future cash generation cautiously. The completion of the full vertical assembly of the Sentinel missile ahead of its 2027 flight test helps explain why some investors expect that gap between price and cash flow value to matter over the longer term. Find out what Northrop Grumman could be worth using our Discounted Cash Flow (DCF) estimate.

    The Northrop Grumman Narrative: What Would Justify Today's Price?

    Simply Wall St Narratives for Northrop Grumman pick up where the valuation puzzle leaves off and explain which paths for growth, margins and earnings would need to occur for the stock to be worth materially more or materially less than today’s price on the Community page. Instead of a single output from a ratio or DCF model, they describe the future that number depends on so you can watch whether Northrop Grumman's actual progress tracks that story over time.

    One of the top community narratives on Northrop Grumman: 21% undervalued

    "Expansion of munitions and solid rocket motor capacity, underpinned by 10 multi year missile acceleration agreements worth up to US$10b over seven years…"

    Discover why this Narrative puts Northrop Grumman at 21% undervalued.

    One more Northrop Grumman check that sits alongside the price tag

    Cash flow models tell you what Northrop Grumman might return to shareholders, but the people steering those decisions, and how their pay lines up with your interests, can change the whole story. See who runs Northrop Grumman and how they are paid.

    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.