Stock Analysis on Net

Northrop Grumman Corp. (NYSE:NOC)

$22.49

This company has been moved to the archive! The financial data has not been updated since April 27, 2023.

Economic Value Added (EVA)

Microsoft Excel

Paying user area


We accept:

Visa Mastercard American Express Maestro Discover JCB PayPal Google Pay
Visa Secure Mastercard Identity Check American Express SafeKey

Economic Profit

Northrop Grumman Corp., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

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).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =


The financial data indicates notable fluctuations in the company's operational performance and economic value over the five-year period.

Net Operating Profit After Taxes (NOPAT)
NOPAT exhibited variability, starting at $3,933 million in 2018, declining significantly to $2,243 million in 2019, then improving sharply to $3,992 million in 2020. A peak occurred in 2021 with NOPAT reaching $8,020 million, followed by a decrease to $4,975 million in 2022. This pattern suggests a period of instability or external impact around 2019, followed by recovery and a subsequent moderate contraction.
Cost of Capital
The cost of capital showed a gradual increase throughout the years, rising from 8.6% in 2018 to 9.27% in 2022. This trend reflects a steadily increasing hurdle rate for investments, which may affect strategic decisions and valuations.
Invested Capital
Invested capital demonstrated consistent growth over the period, increasing from $24,076 million in 2018 to $30,111 million in 2022. This indicates ongoing investment in assets or operations, which may reflect expansion or modernization efforts.
Economic Profit
Economic profit displayed significant volatility: beginning at $1,862 million in 2018, plunging to a minimal $133 million in 2019, then recovering to $1,753 million in 2020. It peaked considerably in 2021 at $5,564 million before decreasing to $2,183 million in 2022. These fluctuations highlight variable value creation relative to the cost of capital, mirroring the trends seen in NOPAT but with more pronounced swings.

Overall, the data reveals a company that experienced considerable ebbs in profitability and economic value early in the period, followed by recovery and expansion. The rising cost of capital and growing invested capital suggest increasing scale and financial demands. The economic profit volatility underscores sensitivity to operational efficiency and capital costs during these years.


Net Operating Profit after Taxes (NOPAT)

Northrop Grumman Corp., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Net earnings
Deferred income tax expense (benefit)1
Increase (decrease) in allowance for expected credit losses2
Increase (decrease) in equity equivalents3
Interest expense
Interest expense, operating lease liability4
Adjusted interest expense
Tax benefit of interest expense5
Adjusted interest expense, after taxes6
Net operating profit after taxes (NOPAT)

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).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for expected credit losses.

3 Addition of increase (decrease) in equity equivalents to net earnings.

4 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

5 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

6 Addition of after taxes interest expense to net earnings.


The financial data reveals variations in net earnings and net operating profit after taxes (NOPAT) for the analyzed periods from 2018 to 2022.

Net earnings
Net earnings exhibited a fluctuation pattern over the five years. There was a marked decline from 3,229 million US dollars in 2018 to 2,248 million in 2019. This was followed by a recovery to 3,189 million in 2020. A significant increase occurred in 2021, reaching 7,005 million US dollars, before decreasing again to 4,896 million in 2022. Overall, there is a noticeable peak in 2021 that suggests an exceptional event or operational performance during that year.
Net operating profit after taxes (NOPAT)
NOPAT mirrored a similar trend as net earnings. It decreased from 3,933 million US dollars in 2018 to 2,243 million in 2019. Subsequently, NOPAT increased to 3,992 million in 2020 and experienced a sharp rise in 2021 to 8,020 million. In 2022, NOPAT declined to 4,975 million. The increase in 2021 is even more pronounced in NOPAT compared to net earnings, indicating that operating efficiency or profitability improved significantly during that year before reverting closer to previous levels in 2022.
Trend analysis
The decrease observed in both metrics from 2018 to 2019 suggests challenges faced during that period. Recovery in 2020 indicates improved financial performance. The exceptional increases in 2021 could be attributed to unique operational factors or market conditions supporting enhanced profitability. The reductions in 2022 imply a normalization following the peak year, though values remain higher than the lows experienced in 2019.

Cash Operating Taxes

Northrop Grumman Corp., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Federal and foreign income tax expense
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense
Cash operating taxes

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).


The data reveals notable fluctuations in the federal and foreign income tax expense and cash operating taxes over the five-year period ending December 31, 2022.

Federal and Foreign Income Tax Expense
The tax expense exhibits a variable trend. Initially, it decreases from 513 million in 2018 to 300 million in 2019. Subsequently, it rises to 539 million in 2020, followed by a significant surge to 1,933 million in 2021. The figure then declines to 940 million in 2022, indicating substantial volatility in the reported tax expense.
Cash Operating Taxes
Cash operating taxes demonstrate a generally increasing pattern with some fluctuation. Starting at 431 million in 2018, the amount nearly doubles to 891 million in 2019 but then decreases to 385 million in 2020. This is followed by a sharp rise to 1,533 million in 2021, after which the value slightly decreases to 1,413 million in 2022. Over the period, cash operating taxes have exhibited an upward momentum, particularly notable in the last two years.

In summary, both tax-related financial metrics display significant changes, with peak values reached in 2021. The federal and foreign income tax expense shows higher volatility compared to cash operating taxes. The patterns suggest a period of increasing tax liabilities culminating in 2021, followed by a partial reversion in 2022, which may reflect changes in taxable income, tax regulations, or company-specific tax strategies during these years.


Invested Capital

Northrop Grumman Corp., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Current portion of long-term debt
Long-term debt, net of current portion
Operating lease liability1
Total reported debt & leases
Shareholders’ equity
Net deferred tax (assets) liabilities2
Allowance for expected credit losses3
Equity equivalents4
Accumulated other comprehensive (income) loss, net of tax5
Adjusted shareholders’ equity
Marketable securities6
Invested capital

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).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of equity equivalents to shareholders’ equity.

5 Removal of accumulated other comprehensive income.

6 Subtraction of marketable securities.


The financial data demonstrates distinct trends over the five-year period from December 31, 2018, through December 31, 2022, across total reported debt and leases, shareholders’ equity, and invested capital.

Total Reported Debt & Leases

This metric experienced minor fluctuations during the period, beginning at $16,124 million in 2018 and decreasing to $15,448 million in 2019. It then rose to a peak of $16,609 million in 2020 before declining to $14,657 million in 2021. In 2022, it increased slightly to $15,000 million. Overall, the total reported debt and leases have remained relatively stable, with variations within a limited range, indicating controlled management of financial obligations.

Shareholders’ Equity

Shareholders’ equity showed a consistent upward trend throughout the period. Starting at $8,187 million in 2018, it increased steadily each year to reach $15,312 million by the end of 2022. This represents an overall growth of approximately 87% over the five-year span, suggesting a strengthening equity base and possibly enhanced retained earnings or capital infusions, contributing to financial stability and increased net asset value.

Invested Capital

Invested capital exhibited a general upward trajectory. From $24,076 million in 2018, it declined slightly in 2019 to $23,507 million but then rose significantly to $26,642 million in 2020. Subsequent years continued this increase, reaching $27,632 million in 2021 and $30,111 million in 2022. This upward movement indicates ongoing investment in the company's operations, assets, or growth initiatives, reflecting expansion or reinvestment strategies.

In summary, the company maintained stable levels of debt across the reviewed years while consistently increasing shareholders’ equity and invested capital. The growth in equity and invested capital, coupled with controlled debt levels, suggests strengthening financial health and a possible focus on sustainable growth and value creation for shareholders.


Cost of Capital

Northrop Grumman Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2019-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2018-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Northrop Grumman Corp., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Boeing Co.
Caterpillar Inc.
Eaton Corp. plc
GE Aerospace
Honeywell International Inc.
Lockheed Martin Corp.
RTX Corp.

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).

1 Economic profit. See details »

2 Invested capital. See details »

3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.


Economic Profit Trends
Economic profit experienced considerable fluctuations over the observed period. It declined sharply from 1,862 million US dollars in 2018 to 133 million in 2019, followed by a modest recovery to 1,753 million in 2020. A significant surge occurred in 2021, reaching a peak of 5,564 million, before decreasing again to 2,183 million in 2022. This pattern indicates a period of volatility with a substantial rebound in 2021.
Invested Capital Trends
Invested capital steadily increased over the five-year period. Starting at 24,076 million US dollars in 2018, it showed a minor decline in 2019 but resumed growth afterward, reaching 30,111 million by the end of 2022. This suggests ongoing capital investment and expansion activities by the company.
Economic Spread Ratio Trends
The economic spread ratio mirrored the volatility seen in economic profit. It decreased from 7.73% in 2018 to a low of 0.57% in 2019, improved substantially to 6.58% in 2020, and peaked impressively at 20.13% in 2021. By 2022, it fell back to 7.25%, still above the initial 2018 level. These variations suggest notable changes in the company's margin over the invested capital, with an extraordinary efficiency in 2021.
Overall Insights
The data reflect significant instability followed by strong recovery and growth in economic profitability metrics around 2021. Meanwhile, invested capital saw continuous growth, which may indicate increased investment fueling the profitability rebound. The economic spread ratio’s peak in 2021 points to a period of exceptional return on invested capital, whereas the subsequent decline might reflect normalization after this peak. The substantial fluctuations in economic profit and spread emphasize the variable performance dynamics within the company during these years.

Economic Profit Margin

Northrop Grumman Corp., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit1
Sales
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Boeing Co.
Caterpillar Inc.
Eaton Corp. plc
GE Aerospace
Honeywell International Inc.
Lockheed Martin Corp.
RTX Corp.

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).

1 Economic profit. See details »

2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales
= 100 × ÷ =

3 Click competitor name to see calculations.


Economic Profit
The economic profit demonstrated significant volatility over the five-year period. It started at 1,862 million USD in 2018, declined sharply to 133 million USD in 2019, and then recovered to 1,753 million USD in 2020. A substantial increase occurred in 2021, reaching 5,564 million USD, followed by a decrease to 2,183 million USD in 2022. This indicates periods of strong economic profitability interspersed with notable downturns.
Sales
Sales showed a general upward trend with some fluctuations. Beginning at 30,095 million USD in 2018, sales increased consistently to 33,841 million USD in 2019 and further to 36,799 million USD in 2020. There was a slight decline to 35,667 million USD in 2021, followed by a return to growth with sales reaching 36,602 million USD in 2022. Overall, sales grew by approximately 21.6% from 2018 to 2022.
Economic Profit Margin
The economic profit margin exhibited considerable variability mirroring the economic profit trends. It began at 6.19% in 2018 then dropped dramatically to 0.39% in 2019. The margin improved to 4.76% in 2020, surged to a peak of 15.6% in 2021, and then decreased to 5.96% in 2022. The peak margin in 2021 suggests a period of heightened profitability relative to sales, while other years indicate lower or minimal economic returns.
Overall Analysis
The financial data reveals fluctuating economic profitability despite generally increasing sales over the examined years. The spike in economic profit and margin in 2021 stands out as an anomalously strong year, potentially reflecting extraordinary operational efficiency or market conditions. The subsequent decline in 2022, while still above earlier years except 2021, suggests a return to more typical profitability levels. The fluctuations emphasize the need for further investigation into the factors influencing economic profit and margin variability, such as cost management, pricing strategies, or external economic conditions.