Should you invest in Northrop Grumman Corporation (NOC)?

LRT Capital Management, an investment management firm, has released its October 2022 Letter to Investors. A copy of it can be downloaded here. October results were excellent and its LRT Economic Moat strategy returned 7.38%. Additionally, you can check out the fund’s top 5 holdings for its top picks in 2022.

LRT Capital discussed stocks like Northrop Grumman Corporation (NYSE:NOC) in the letter to investors. Headquartered in Falls Church, Virginia, Northrop Grumman Corporation (NYSE: NOC) is a global aerospace and defense company. On November 16, 2022, Northrop Grumman Corporation (NYSE:NOC) stock closed at $505.13 per share. Northrop Grumman Corporation’s (NYSE:NOC) one-month return was -1.43% and its shares have gained 43.74% of their value over the past 52 weeks. Northrop Grumman Corporation (NYSE: NOC) has a market cap of $77.746 billion.

LRT Capital made the following comment about Northrop Grumman Corporation (NYSE:NOC) in its October letter to investors:

“Based in Virginia, Northrop Grumman Company (NYSE: NOC) is one of the largest defense contractors in the world with annual revenue of more than $30 billion. The company operates in a cozy oligopoly, after decades of consolidation, the US defense market is now controlled by five major companies: The Boeing Company (BA), General Dynamics Corporation (GD), Lockheed Martin Corporation (LMT), Northrop Grumman Corporation (NOC) and Raytheon Technologies Corporation (RTX).

Barriers to industry entry are immense, government procurement cycles are extremely long, and the industry’s consolidated structure reflects this. This industry structure has allowed Northrop to achieve stable returns on invested capital (ROIC) through its mid-teens and grow earnings per share at a rate of more than 13% per year during the last decade, despite a turnover that has only increased in line with inflation. . Even after the recent surge in the stock price, it is trading at around 15x, next year’s earnings estimates, well below the S&P 500 index, despite being an au- above average. Although there are theoretically five major defense contractors, the true industry concentration is even higher because not all companies compete in all possible business segments. General Dynamics’ submarine division, Electric Boat, is the only supplier of nuclear submarines in the United States. Lockheed Martin is the sole supplier of the F-35 and F-22. Northrop was the sole bidder for the contract to develop the next generation of intercontinental ballistic missiles; and so on…” (Click here to read the full text)

Photo by SpaceX on Unsplash

Northrop Grumman Corporation (NYSE: NOC) is not on our list of the 30 most popular stocks among hedge funds. According to our database, 46 hedge fund portfolios held Northrop Grumman Corporation (NYSE:NOC) at the end of the third quarter, up from 45 in the previous quarter.

We discussed Northrop Grumman Corporation (NYSE:NOC) in another article and shared the largest defense equipment companies in the world. Additionally, please see our Q3 2022 Hedge Fund Investor Letters page for more letters to hedge fund investors and other leading investors.

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Disclosure: none. This article originally appeared on Insider Monkey.

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