Intrinsic value of Northrop Grumman - NOC

Previous Close

$270.72

  Intrinsic Value

$509.69

stock screener

  Rating & Target

str. buy

+88%

Previous close

$270.72

 
Intrinsic value

$509.69

 
Up/down potential

+88%

 
Rating

str. buy

We calculate the intrinsic value of NOC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 47.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
Revenue, $m
  28,383
  31,080
  33,892
  36,822
  39,872
  43,042
  46,338
  49,763
  53,322
  57,021
  60,867
  64,865
  69,024
  73,353
  77,859
  82,554
  87,446
  92,548
  97,870
  103,424
  109,224
  115,283
  121,615
  128,235
  135,158
  142,401
  149,981
  157,916
  166,225
  174,928
Variable operating expenses, $m
  24,568
  26,784
  29,094
  31,501
  34,006
  36,611
  39,319
  42,133
  45,057
  48,095
  50,004
  53,288
  56,705
  60,261
  63,964
  67,820
  71,840
  76,031
  80,403
  84,966
  89,731
  94,708
  99,910
  105,348
  111,036
  116,986
  123,214
  129,732
  136,559
  143,708
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  24,568
  26,784
  29,094
  31,501
  34,006
  36,611
  39,319
  42,133
  45,057
  48,095
  50,004
  53,288
  56,705
  60,261
  63,964
  67,820
  71,840
  76,031
  80,403
  84,966
  89,731
  94,708
  99,910
  105,348
  111,036
  116,986
  123,214
  129,732
  136,559
  143,708
Operating income, $m
  3,815
  4,296
  4,798
  5,321
  5,865
  6,431
  7,019
  7,631
  8,266
  8,926
  10,863
  11,577
  12,319
  13,091
  13,896
  14,733
  15,607
  16,517
  17,467
  18,458
  19,493
  20,575
  21,705
  22,886
  24,122
  25,414
  26,767
  28,183
  29,666
  31,220
EBITDA, $m
  5,437
  5,954
  6,493
  7,054
  7,638
  8,246
  8,877
  9,533
  10,215
  10,924
  11,660
  12,426
  13,223
  14,052
  14,916
  15,815
  16,752
  17,730
  18,749
  19,813
  20,924
  22,085
  23,298
  24,566
  25,892
  27,280
  28,732
  30,252
  31,844
  33,511
Interest expense (income), $m
  0
  778
  924
  1,081
  1,246
  1,417
  1,595
  1,780
  1,973
  2,173
  2,381
  2,597
  2,821
  3,055
  3,298
  3,551
  3,814
  4,088
  4,374
  4,672
  4,983
  5,307
  5,646
  6,000
  6,370
  6,756
  7,161
  7,584
  8,027
  8,490
  8,976
Earnings before tax, $m
  3,037
  3,372
  3,717
  4,076
  4,449
  4,836
  5,239
  5,658
  6,093
  6,545
  8,266
  8,755
  9,264
  9,794
  10,345
  10,920
  11,519
  12,143
  12,795
  13,476
  14,186
  14,929
  15,705
  16,516
  17,365
  18,254
  19,183
  20,157
  21,176
  22,244
Tax expense, $m
  820
  911
  1,004
  1,100
  1,201
  1,306
  1,415
  1,528
  1,645
  1,767
  2,232
  2,364
  2,501
  2,644
  2,793
  2,948
  3,110
  3,279
  3,455
  3,638
  3,830
  4,031
  4,240
  4,459
  4,689
  4,928
  5,180
  5,442
  5,718
  6,006
Net income, $m
  2,217
  2,462
  2,713
  2,975
  3,247
  3,531
  3,825
  4,130
  4,448
  4,778
  6,034
  6,391
  6,763
  7,149
  7,552
  7,971
  8,409
  8,865
  9,340
  9,837
  10,356
  10,898
  11,465
  12,057
  12,677
  13,325
  14,004
  14,714
  15,459
  16,238

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  34,115
  37,355
  40,736
  44,258
  47,922
  51,733
  55,695
  59,812
  64,089
  68,535
  73,157
  77,963
  82,962
  88,164
  93,581
  99,223
  105,104
  111,235
  117,632
  124,308
  131,279
  138,561
  146,172
  154,128
  162,449
  171,155
  180,265
  189,803
  199,790
  210,250
Adjusted assets (=assets-cash), $m
  34,115
  37,355
  40,736
  44,258
  47,922
  51,733
  55,695
  59,812
  64,089
  68,535
  73,157
  77,963
  82,962
  88,164
  93,581
  99,223
  105,104
  111,235
  117,632
  124,308
  131,279
  138,561
  146,172
  154,128
  162,449
  171,155
  180,265
  189,803
  199,790
  210,250
Revenue / Adjusted assets
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
Average production assets, $m
  11,155
  12,214
  13,320
  14,471
  15,670
  16,916
  18,211
  19,557
  20,956
  22,409
  23,921
  25,492
  27,127
  28,828
  30,599
  32,444
  34,366
  36,371
  38,463
  40,646
  42,925
  45,306
  47,795
  50,396
  53,117
  55,963
  58,942
  62,061
  65,326
  68,747
Working capital, $m
  -1,902
  -2,082
  -2,271
  -2,467
  -2,671
  -2,884
  -3,105
  -3,334
  -3,573
  -3,820
  -4,078
  -4,346
  -4,625
  -4,915
  -5,217
  -5,531
  -5,859
  -6,201
  -6,557
  -6,929
  -7,318
  -7,724
  -8,148
  -8,592
  -9,056
  -9,541
  -10,049
  -10,580
  -11,137
  -11,720
Total debt, $m
  17,106
  20,023
  23,065
  26,235
  29,533
  32,963
  36,528
  40,233
  44,083
  48,085
  52,244
  56,569
  61,069
  65,751
  70,626
  75,704
  80,996
  86,515
  92,272
  98,280
  104,554
  111,108
  117,958
  125,118
  132,607
  140,442
  148,642
  157,226
  166,214
  175,628
Total liabilities, $m
  30,703
  33,620
  36,662
  39,832
  43,130
  46,560
  50,125
  53,830
  57,680
  61,682
  65,841
  70,166
  74,666
  79,348
  84,223
  89,301
  94,593
  100,112
  105,869
  111,877
  118,151
  124,705
  131,555
  138,715
  146,204
  154,039
  162,239
  170,823
  179,811
  189,225
Total equity, $m
  3,411
  3,736
  4,074
  4,426
  4,792
  5,173
  5,569
  5,981
  6,409
  6,854
  7,316
  7,796
  8,296
  8,816
  9,358
  9,922
  10,510
  11,124
  11,763
  12,431
  13,128
  13,856
  14,617
  15,413
  16,245
  17,115
  18,027
  18,980
  19,979
  21,025
Total liabilities and equity, $m
  34,114
  37,356
  40,736
  44,258
  47,922
  51,733
  55,694
  59,811
  64,089
  68,536
  73,157
  77,962
  82,962
  88,164
  93,581
  99,223
  105,103
  111,236
  117,632
  124,308
  131,279
  138,561
  146,172
  154,128
  162,449
  171,154
  180,266
  189,803
  199,790
  210,250
Debt-to-equity ratio
  5.010
  5.360
  5.660
  5.930
  6.160
  6.370
  6.560
  6.730
  6.880
  7.020
  7.140
  7.260
  7.360
  7.460
  7.550
  7.630
  7.710
  7.780
  7.840
  7.910
  7.960
  8.020
  8.070
  8.120
  8.160
  8.210
  8.250
  8.280
  8.320
  8.350
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,217
  2,462
  2,713
  2,975
  3,247
  3,531
  3,825
  4,130
  4,448
  4,778
  6,034
  6,391
  6,763
  7,149
  7,552
  7,971
  8,409
  8,865
  9,340
  9,837
  10,356
  10,898
  11,465
  12,057
  12,677
  13,325
  14,004
  14,714
  15,459
  16,238
Depreciation, amort., depletion, $m
  1,623
  1,658
  1,695
  1,733
  1,773
  1,815
  1,858
  1,903
  1,949
  1,998
  797
  850
  904
  961
  1,020
  1,081
  1,146
  1,212
  1,282
  1,355
  1,431
  1,510
  1,593
  1,680
  1,771
  1,865
  1,965
  2,069
  2,178
  2,292
Funds from operations, $m
  3,840
  4,120
  4,408
  4,708
  5,020
  5,345
  5,682
  6,033
  6,397
  6,776
  6,832
  7,241
  7,667
  8,110
  8,572
  9,053
  9,554
  10,077
  10,623
  11,192
  11,787
  12,408
  13,058
  13,737
  14,447
  15,191
  15,969
  16,783
  17,636
  18,530
Change in working capital, $m
  -173
  -181
  -188
  -196
  -204
  -212
  -221
  -229
  -238
  -248
  -258
  -268
  -279
  -290
  -302
  -315
  -328
  -342
  -357
  -372
  -389
  -406
  -424
  -444
  -464
  -485
  -508
  -532
  -557
  -583
Cash from operations, $m
  4,013
  4,300
  4,596
  4,905
  5,225
  5,557
  5,903
  6,262
  6,636
  7,024
  7,089
  7,509
  7,946
  8,400
  8,874
  9,367
  9,882
  10,419
  10,979
  11,564
  12,175
  12,814
  13,482
  14,180
  14,911
  15,676
  16,476
  17,315
  18,193
  19,113
Maintenance CAPEX, $m
  -338
  -372
  -407
  -444
  -482
  -522
  -564
  -607
  -652
  -699
  -747
  -797
  -850
  -904
  -961
  -1,020
  -1,081
  -1,146
  -1,212
  -1,282
  -1,355
  -1,431
  -1,510
  -1,593
  -1,680
  -1,771
  -1,865
  -1,965
  -2,069
  -2,178
New CAPEX, $m
  -1,009
  -1,060
  -1,105
  -1,151
  -1,198
  -1,246
  -1,295
  -1,346
  -1,399
  -1,454
  -1,511
  -1,571
  -1,635
  -1,701
  -1,771
  -1,845
  -1,923
  -2,005
  -2,092
  -2,183
  -2,279
  -2,381
  -2,488
  -2,602
  -2,721
  -2,847
  -2,979
  -3,118
  -3,265
  -3,420
Cash from investing activities, $m
  -1,347
  -1,432
  -1,512
  -1,595
  -1,680
  -1,768
  -1,859
  -1,953
  -2,051
  -2,153
  -2,258
  -2,368
  -2,485
  -2,605
  -2,732
  -2,865
  -3,004
  -3,151
  -3,304
  -3,465
  -3,634
  -3,812
  -3,998
  -4,195
  -4,401
  -4,618
  -4,844
  -5,083
  -5,334
  -5,598
Free cash flow, $m
  2,666
  2,869
  3,084
  3,309
  3,544
  3,789
  4,044
  4,309
  4,585
  4,871
  4,831
  5,140
  5,461
  5,795
  6,142
  6,502
  6,878
  7,268
  7,675
  8,099
  8,541
  9,002
  9,483
  9,986
  10,510
  11,059
  11,632
  12,232
  12,859
  13,515
Issuance/(repayment) of debt, $m
  2,707
  2,917
  3,043
  3,169
  3,298
  3,430
  3,565
  3,705
  3,850
  4,001
  4,159
  4,325
  4,499
  4,682
  4,875
  5,078
  5,292
  5,518
  5,757
  6,009
  6,274
  6,554
  6,849
  7,161
  7,489
  7,835
  8,200
  8,584
  8,988
  9,414
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,707
  2,917
  3,043
  3,169
  3,298
  3,430
  3,565
  3,705
  3,850
  4,001
  4,159
  4,325
  4,499
  4,682
  4,875
  5,078
  5,292
  5,518
  5,757
  6,009
  6,274
  6,554
  6,849
  7,161
  7,489
  7,835
  8,200
  8,584
  8,988
  9,414
Total cash flow (excl. dividends), $m
  5,373
  5,786
  6,127
  6,478
  6,842
  7,219
  7,609
  8,014
  8,435
  8,873
  8,991
  9,465
  9,961
  10,477
  11,017
  11,581
  12,170
  12,787
  13,432
  14,108
  14,815
  15,556
  16,333
  17,146
  17,999
  18,894
  19,832
  20,815
  21,847
  22,929
Retained Cash Flow (-), $m
  -412
  -324
  -338
  -352
  -366
  -381
  -396
  -412
  -428
  -445
  -462
  -481
  -500
  -520
  -542
  -564
  -588
  -613
  -640
  -668
  -697
  -728
  -761
  -796
  -832
  -871
  -911
  -954
  -999
  -1,046
Prev. year cash balance distribution, $m
  4,133
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  9,093
  5,462
  5,788
  6,126
  6,476
  6,838
  7,213
  7,603
  8,007
  8,428
  8,529
  8,985
  9,461
  9,957
  10,475
  11,016
  11,582
  12,174
  12,792
  13,440
  14,118
  14,828
  15,572
  16,351
  17,167
  18,023
  18,921
  19,861
  20,848
  21,883
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  8,718
  5,000
  5,038
  5,044
  5,020
  4,963
  4,873
  4,752
  4,600
  4,419
  4,050
  3,834
  3,597
  3,343
  3,075
  2,799
  2,520
  2,242
  1,970
  1,708
  1,460
  1,230
  1,021
  833
  668
  526
  406
  307
  228
  165
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Northrop Grumman Corporation is a global security company. The Company provides products, systems and solutions in autonomous systems; cyber; command, control, communications and computers, intelligence, surveillance and reconnaissance (C4ISR); strike, and logistics and modernization. The Company's segments include Aerospace Systems, Mission Systems and Technology Services. The Company's Aerospace Systems segment is engaged in the design, development, integration and production of manned aircraft, autonomous systems, spacecraft, high-energy laser systems, microelectronics and other systems/subsystems. The Mission Systems segment offers mission solutions and multifunction systems for Department of Defense (DoD), intelligence community, international, federal civil and commercial customers. The Technology Services segment provides logistics solutions supporting the full life cycle of platforms and systems for global defense and federal-civil customers.

FINANCIAL RATIOS  of  Northrop Grumman (NOC)

Valuation Ratios
P/E Ratio 21.5
Price to Sales 1.9
Price to Book 9
Price to Tangible Book
Price to Cash Flow 16.8
Price to Free Cash Flow 25
Growth Rates
Sales Growth Rate 4.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 95.3%
Cap. Spend. - 3 Yr. Gr. Rate 20.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 134.2%
Total Debt to Equity 134.2%
Interest Coverage 0
Management Effectiveness
Return On Assets 8.8%
Ret/ On Assets - 3 Yr. Avg. 8.1%
Return On Total Capital 18.2%
Ret/ On T. Cap. - 3 Yr. Avg. 16%
Return On Equity 40.8%
Return On Equity - 3 Yr. Avg. 31.7%
Asset Turnover 1
Profitability Ratios
Gross Margin 23.6%
Gross Margin - 3 Yr. Avg. 23.6%
EBITDA Margin 13.8%
EBITDA Margin - 3 Yr. Avg. 13.9%
Operating Margin 13%
Oper. Margin - 3 Yr. Avg. 13.1%
Pre-Tax Margin 11.9%
Pre-Tax Margin - 3 Yr. Avg. 12%
Net Profit Margin 9%
Net Profit Margin - 3 Yr. Avg. 8.7%
Effective Tax Rate 24.7%
Eff/ Tax Rate - 3 Yr. Avg. 27.7%
Payout Ratio 29.1%

NOC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NOC stock intrinsic value calculation we used $25803 million for the last fiscal year's total revenue generated by Northrop Grumman. The default revenue input number comes from 0001 income statement of Northrop Grumman. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NOC stock valuation model: a) initial revenue growth rate of 10% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for NOC is calculated based on our internal credit rating of Northrop Grumman, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Northrop Grumman.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NOC stock the variable cost ratio is equal to 87%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NOC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Northrop Grumman.

Corporate tax rate of 27% is the nominal tax rate for Northrop Grumman. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NOC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NOC are equal to 39.3%.

Life of production assets of 34.5 years is the average useful life of capital assets used in Northrop Grumman operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NOC is equal to -6.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $7132 million for Northrop Grumman - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 174.123 million for Northrop Grumman is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Northrop Grumman at the current share price and the inputted number of shares is $47.1 billion.

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