Northrop Grumman(NOC)2023-11-12 05:33Key Points Industry/Company * Company: Northrop Grumman Corporation (NYSE:NOC) * Industry: Aerospace and defense Core Views and Arguments * Strategy: Northrop Grumman's strategy focuses on technology differentiation, sustainable and profitable growth, performance and execution, and efficient capital deployment. * Backlog: The company has reached a historic backlog of $84 billion, driven by strong demand both domestically and internationally. * Growth: The company expects 6.5% growth in 2023 and 4-5% growth in 2024, with a focus on space, mission systems, defense systems, and aeronautics. * Free Cash Flow: Northrop Grumman maintains its free cash flow guidance and expects it to grow significantly over the next few years, driven by operational improvements and non-operational factors. * Capital Deployment: The company plans to return at least 100% of its free cash flow to shareholders through dividends and share repurchases. Other Important Points * Space: The space segment is expected to grow at a slightly higher rate than the company average in 2024, driven by launch support and SDA constellations. * Mission Systems and Defense Systems: These segments are expected to grow in line with the company average, with opportunities in munitions and integrated air and missile defense. * Aeronautics: The aeronautics segment is expected to see modest growth in 2024, with opportunities in international markets. * B-21: The B-21 program is progressing well and is expected to enter the low rate initial production phase in the fourth quarter of 2023. * International: The international business is expected to grow at a rate similar to or higher than the company average, driven by opportunities in munitions, integrated air and missile defense, and aeronautics. * Margins: The company expects modest margin expansion in 2024, driven by operational improvements and changes in the mix of business. * Cash Flow: The company expects free cash flow to grow significantly over the next few years, driven by operational improvements, non-operational factors, and capital expenditure reductions.