Price to Operating Profit (P/OP)
since 2005
Calculation
Northrop Grumman Corp., P/OP, long-term trends, calculation
| P/OP | = | Share price1, 2, 3 | ÷ | Operating profit per share1 | Operating profit per share1 | = | Operating income (loss)1 (in millions) |
÷ | No. shares of common stock outstanding2 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Jan 26, 2023 | 18.85 | = | 443.47 | ÷ | 23.53 | 23.53 | = | 3,601 | ÷ | 153,053,371 | |
| Jan 27, 2022 | 10.33 | = | 373.99 | ÷ | 36.20 | 36.20 | = | 5,651 | ÷ | 156,101,934 | |
| Jan 28, 2021 | 12.02 | = | 293.03 | ÷ | 24.38 | 24.38 | = | 4,065 | ÷ | 166,718,384 | |
| Jan 30, 2020 | 16.26 | = | 384.87 | ÷ | 23.68 | 23.68 | = | 3,969 | ÷ | 167,637,130 | |
| Jan 31, 2019 | 12.37 | = | 275.55 | ÷ | 22.27 | 22.27 | = | 3,780 | ÷ | 169,737,507 | |
| Jan 29, 2018 | 17.85 | = | 338.34 | ÷ | 18.95 | 18.95 | = | 3,299 | ÷ | 174,087,585 | |
| Jan 30, 2017 | 12.55 | = | 229.48 | ÷ | 18.29 | 18.29 | = | 3,193 | ÷ | 174,599,406 | |
| Feb 1, 2016 | 11.10 | = | 188.64 | ÷ | 17.00 | 17.00 | = | 3,076 | ÷ | 180,943,220 | |
| Feb 2, 2015 | 9.88 | = | 159.19 | ÷ | 16.11 | 16.11 | = | 3,196 | ÷ | 198,405,799 | |
| Feb 3, 2014 | 7.86 | = | 113.25 | ÷ | 14.41 | 14.41 | = | 3,123 | ÷ | 216,737,248 | |
| Feb 5, 2013 | 4.92 | = | 64.88 | ÷ | 13.20 | 13.20 | = | 3,130 | ÷ | 237,126,501 | |
| Feb 8, 2012 | 4.67 | = | 60.50 | ÷ | 12.97 | 12.97 | = | 3,276 | ÷ | 252,631,776 | |
| Feb 9, 2011 | 6.82 | = | 71.87 | ÷ | 10.54 | 10.54 | = | 3,070 | ÷ | 291,312,990 | |
| Feb 9, 2010 | 7.26 | = | 59.55 | ÷ | 8.20 | 8.20 | = | 2,483 | ÷ | 302,771,417 | |
| Feb 10, 2009 | — | = | 44.54 | ÷ | -0.34 | -0.34 | = | -111 | ÷ | 327,180,490 | |
| Feb 20, 2008 | 9.11 | = | 81.00 | ÷ | 8.90 | 8.90 | = | 3,006 | ÷ | 337,919,384 | |
| Feb 21, 2007 | 10.75 | = | 75.29 | ÷ | 7.01 | 7.01 | = | 2,454 | ÷ | 350,262,436 | |
| Feb 17, 2006 | 10.58 | = | 65.71 | ÷ | 6.21 | 6.21 | = | 2,178 | ÷ | 350,705,853 |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
1 US$
2 Data adjusted for splits and stock dividends.
3 Closing price as at the filing date of Northrop Grumman Corp. Annual Report.
The financial trajectory from 2006 to 2023 reflects a long-term expansion in both market valuation and operational profitability, despite a period of significant volatility during the late 2000s.
- Share Price Trends
- An overall upward trajectory is observed in the share price, which ascended from $65.71 in 2006 to $443.47 in 2023. This growth was interrupted by a sharp decline in 2009, where the price fell to $44.54. Following this trough, the price entered a sustained growth phase, particularly accelerating after 2014.
- Operating Profit per Share Performance
- Operating profit per share grew from $6.21 in 2006 to $23.53 in 2023. A notable contraction occurred in 2009, resulting in a negative value of -$0.34. Subsequent recovery led to a consistent climb, peaking at $36.20 in 2022 before experiencing a decrease in 2023.
- Price to Operating Profit (P/OP) Ratio Analysis
- The P/OP ratio experienced three distinct phases of valuation. The first phase (2006–2008) showed relative stability, with the ratio ranging between 9.11 and 10.75. The second phase (2010–2013) was characterized by valuation compression, reaching a cyclical low of 4.67 in 2012. The third phase (2014–2023) marked a period of valuation expansion and increased volatility, with the ratio reaching a peak of 18.85 in 2023.
- Correlation Between Valuation and Profitability
- A divergence is evident in the final years of the analysis. Between 2022 and 2023, operating profit per share declined from $36.20 to $23.53, yet the P/OP ratio increased from 10.33 to 18.85. This indicates that the share price continued to rise despite a reduction in operational profitability, leading to a significant expansion in the valuation multiple.
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Comparison to Competitors
Northrop Grumman Corp., P/OP, long-term trends, comparison to competitors
| Northrop Grumman Corp. | Boeing Co. | Caterpillar Inc. | Lockheed Martin Corp. | RTX Corp. | |
|---|---|---|---|---|---|
| Jan 26, 2023 | 18.85 | — | 16.25 | 14.06 | 26.48 |
| Jan 27, 2022 | 10.33 | — | 15.87 | 11.56 | 28.68 |
| Jan 28, 2021 | 12.02 | — | 24.23 | 10.63 | — |
| Jan 30, 2020 | 16.26 | — | 9.08 | 14.49 | 15.07 |
| Jan 31, 2019 | 12.37 | 19.08 | 9.20 | 11.62 | 12.16 |
| Jan 29, 2018 | 17.85 | 19.69 | 21.70 | 16.47 | 11.53 |
| Jan 30, 2017 | 12.55 | 17.20 | 116.61 | 13.51 | 10.86 |
| Feb 1, 2016 | 11.10 | 10.36 | 11.66 | 12.17 | 9.71 |
| Feb 2, 2015 | 9.88 | 13.96 | 9.71 | 10.89 | 11.15 |
| Feb 3, 2014 | 7.86 | 14.75 | 10.94 | 11.62 | 10.88 |
| Feb 5, 2013 | 4.92 | 9.09 | 7.30 | 6.40 | 10.73 |
| Feb 8, 2012 | 4.67 | 9.69 | 10.41 | 7.21 | 9.40 |
| Feb 9, 2011 | 6.82 | 10.76 | 16.44 | 6.84 | 10.86 |
| Feb 9, 2010 | 7.26 | 20.91 | 63.07 | 6.47 | 9.67 |
| Feb 10, 2009 | — | 7.87 | 3.61 | 5.31 | 5.88 |
| Feb 20, 2008 | 9.11 | 11.17 | 9.03 | 9.48 | 9.95 |
| Feb 21, 2007 | 10.75 | 23.81 | 8.83 | 10.84 | 11.11 |
| Feb 17, 2006 | 10.58 | 20.69 | 12.95 | 10.66 | 11.11 |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).