10 Best Defense Stocks To Buy Now

05. Northrop Grumman Corporation (NYSE:NOC)

Number of Hedge Fund Holders: 49

Northrop Grumman Corporation (NYSE:NOC) is a key player in the defense sector, known for its advanced aircraft systems and crucial contributions to national security. Its inclusion as a top defense stock is justified by its strong focus on technology-driven solutions for the U.S. military and international defense markets. The company operates through four major segments: Aeronautics Systems, Defense Systems, Mission Systems, and Space Systems, all of which provide essential capabilities for global defense.

In the second quarter of 2024, Northrop Grumman Corporation (NYSE:NOC) beat expectations, reporting earnings per share (EPS) of $6.36 compared to the forecast of $5.93. This strong performance is attributed to several factors, including a 7% increase in sales, a 13% growth in operating income, and an impressive 19% year-over-year increase in EPS. The company’s solid cash flow generation, with free cash flow increasing by over $500 million compared to the previous year, highlights its robust financial position.

The Aeronautics Systems segment saw a 14% increase in sales, driven by key programs like the B-21 and F-35, while Defense Systems experienced 7% growth due to higher demand for military ammunition and weapons systems. Northrop Grumman Corporation (NYSE:NOC) alignment with U.S. defense priorities, including its work on strategic deterrent programs like Sentinel and B-21, ensures continued revenue growth. The company is also expanding its international reach, winning contracts for missile defense and ammunition production.

Northrop Grumman Corporation (NYSE:NOC) backlog of $83 billion and a book-to-bill ratio of 1.5 reflect strong demand for its products and services. The company’s disciplined cost management and focus on operational efficiency have helped maintain strong margins, with a second-quarter operating margin of 13.5% in Defense Systems. This, along with continued growth in international sales and expanding missile defense capabilities, positions Northrop Grumman Corporation (NYSE:NOC) as a top defense stock with solid long-term potential for investors.