11 Undervalued Aerospace Stocks To Buy According to Hedge Funds

3. Northrop Grumman Corporation (NYSE:NOC)

Forward Price to Earnings Ratio: 17.57

Number of Hedge Fund Holders: 48

Northrop Grumman Corporation (NYSE:NOC) is one of the largest defense contractors in the world. The company is the manufacturer of the B-21 Raider for the United States Air Force (USAF), which was formally unveiled in December 2022. The long-range, stealth strategic bomber, intended to replace the aging B-1B Lancer and B-2 Spirit, is scheduled to enter service from mid-2020s onwards.

The company is also a leading player in autonomous aerial systems. It is the maker of the RQ-4 Global Hawk, noted for its surveillance and intelligence operations in Afghanistan, Iraq, and parts of North Africa. In April this year, NOC was awarded a $387 million contract to sustain Italy, Japan, and South Korea’s RQ-4 Global Hawk drones. Moreover, NOC’s MQ-4C Triton unmanned aerial vehicle, currently operated by the United States and Australia, has immense export potential and has received interest from NATO and Norway.

On October 24, Northrop Grumman Corporation (NYSE:NOC) announced financial results for the third quarter of fiscal 2024. The company generated sales of $10 billion, up 2% compared to the third quarter of 2023, driven by a surge in demand for advanced weapons amid intense escalations in the Middle East and the Ukraine-Russia war.

Aeronautics Systems revenue grew 4% year-over-year to $2.9 billion, with gains attributed to higher F-35, E2, and Triton volumes. Sales at Defense Systems surged by 2% due to higher sales of Sentinel and other weapons from NOC’s portfolio. Mission Systems also registered a 7% increase in sales, fueled by a higher volume of microelectronics and advanced technology programs. As a result, Northrop Grumman Corporation (NYSE:NOC) posted an EPS of $7, smashing estimates of $6.08 per share.

Wall Street analysts have a consensus Buy rating for NOC and anticipate a 17.5% upside in its share price. It is among the top undervalued aerospace stocks to buy according to hedge funds.