Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, defense contractor Northrop Grumman (NYSE: NOC ) has earned a respected four-star ranking. While five-star stocks have been the best performers, our data has shown that four-star stocks still outshine the market by a significant margin and shouldn't be taken lightly; conversely, low-rated stocks have woefully lagged the market average.
With that in mind, let's take a closer look at Northrop Grumman's business, and see what CAPS investors are saying about the stock right now.
Northrop facts
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Headquarters (founded)
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Los Angeles, California (1939)
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Market Cap
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$14.4 billion
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Industry
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Aerospace & Defense
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TTM Revenue
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$33.7 billion
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Management
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CEO Ronald Sugar (since April 2003)
CFO James Palmer (since March 2007)
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Return on Equity (average last three years)
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9.5%
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Dividend Yield
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3.7%
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Competitors
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United Technologies (NYSE: UTX ) ,
Boeing (NYSE: BA )
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CAPS members bullish on NOC also bullish on
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Apple (Nasdaq: AAPL ) ,
General Electric (NYSE: GE )
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CAPS members bearish on NOC also bearish on
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Lockheed Martin (NYSE: LMT ) ,
Citigroup (NYSE: C )
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Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.
Over on CAPS, fully 141 of the 154 All-Star members who have rated Northrop -- some 92% -- believe the stock will outperform the S&P 500 going forward. These bulls include lenri and falcon2382, both of whom are ranked in the top 10% of our community.
Just two days ago, lenri noted a few of the stock's bullish metrics: "It has a current ratio of 1.1 and a price to book value of 0.9 which means its costs slightly less than its value of its assets of about $55 a share. ... It pays a dividend of around 3.5% so there is income-paying downside projection."
An earlier pitch from falcon2382 in late September agrees, highlighting Northrop's attractive valuation (which is even cheaper today) as a great reason to get long:
This is a long term buy and hold at these levels. ... It might go a little lower given the craziness of the market panic right now, but relative to the greater market, Northrop is solid with tons of cash and a ridiculously low price to book value. Even if spending on defense subsides compared to the last five years, I think NOC can acquire growth fairly easily given there cash position and the debt to price ratios of other companies at the moment. Great long term play.
What do you think about Northrop, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.
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