Northrop Beneish M Score

NOC
 Stock
  

USD 485.63  1.24  0.25%   

This module uses fundamental data of Northrop Grumman to approximate the value of its Beneish M Score. Northrop Grumman M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Additionally, see Northrop Grumman Piotroski F Score and Northrop Grumman Altman Z Score analysis.
  
As of August 16, 2022, Total Debt is expected to decline to about 14.5 B. In addition to that, Debt Current is expected to decline to about 701.5 M. Northrop Grumman Interest Coverage is projected to drop based on the last few years of reporting. The past year's Interest Coverage was at 6.60. The current year Calculated Tax Rate is expected to grow to 25.73, whereas Long Term Debt to Equity is forecasted to decline to 0.96.
At this time, it appears that Northrop Grumman Corp is an unlikely manipulator. The earnings manipulation may begin if Northrop Grumman's top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by Northrop Grumman executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of Northrop Grumman's earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
-2.98
Beneish M Score - Unlikely Manipulator
Elasticity of Receivables0.97Focus
Asset QualityN/AFocus
Expense Coverage1.07Focus
Gross Margin Strengs0.98Focus
Accruals Factor1.07Focus
Depreciation Resistance1.32Focus
Net Sales Growth0.87Focus
Financial Leverage Condition0.99Focus

Northrop Grumman Beneish M-Score Indicator Trends

The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if Northrop Grumman's auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
Current ValueLast YearChange From Last Year 10 Year Trend
Revenues30.9 B35.7 B
Fairly Down
Increasing
Slightly volatile
Selling General and Administrative Expense3.6 B3.9 B
Significantly Down
Increasing
Slightly volatile
Net Cash Flow from Operations3.1 B3.6 B
Fairly Down
Increasing
Slightly volatile
Depreciation Amortization and Accretion1.2 B1.5 B
Significantly Down
Increasing
Slightly volatile
Total Assets36 B42.6 B
Fairly Down
Increasing
Slightly volatile
Property Plant and Equipment Net10.7 B9.9 B
Significantly Up
Increasing
Slightly volatile
Trade and Non Trade Receivables6.4 B7.6 B
Fairly Down
Increasing
Slightly volatile
Total Liabilities25.3 B29.7 B
Fairly Down
Increasing
Slightly volatile
Current Assets10.8 B12.4 B
Fairly Down
Increasing
Slightly volatile
Assets Non Current29.8 B33.5 B
Fairly Down
Increasing
Slightly volatile
Current Liabilities8.1 B9.5 B
Fairly Down
Increasing
Slightly volatile
Liabilities Non Current23.6 B28 B
Fairly Down
Increasing
Slightly volatile
Total Debt14.5 B17.9 B
Significantly Down
Increasing
Slightly volatile
Debt Current701.5 M705.6 M
Slightly Down
Decreasing
Slightly volatile
Debt Non Current14.4 B17.9 B
Significantly Down
Increasing
Slightly volatile
Operating Income3.4 B3.7 B
Significantly Down
Increasing
Slightly volatile
Gross Margin19.920.3774
Fairly Down
Decreasing
Very volatile

Northrop Grumman Corp Beneish M-Score Driver Matrix

One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between Northrop Grumman's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards Northrop Grumman in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find Northrop Grumman's degree of accounting gimmicks and manipulations.

About Northrop Grumman Beneish M Score

M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.

Operating Expenses

3.62 Billion

Northrop Grumman Operating Expenses is projected to increase significantly based on the last few years of reporting. The past year's Operating Expenses was at 3.92 Billion

Northrop Grumman Earnings Manipulation Drivers

Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as Northrop Grumman. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
201720182019202020212022 (projected)
Revenues25.8 B30.09 B33.84 B36.8 B35.67 B30.89 B
Total Assets34.92 B37.65 B41.09 B44.47 B42.58 B35.99 B
Current Assets16.35 B9.68 B10.69 B15.34 B12.43 B10.8 B
Assets Non Current18.54 B27.97 B30.4 B29.12 B33.49 B29.84 B
Total Liabilities27.87 B29.47 B32.27 B33.89 B29.65 B25.34 B
Current Liabilities6.96 B8.27 B9.43 B9.58 B9.53 B8.07 B
Total Debt14.4 B13.88 B14.08 B15.6 B17.94 B14.49 B
Debt Non Current14.4 B13.88 B14.08 B15.6 B17.94 B14.45 B
Operating Income3.3 B3.78 B3.97 B4.07 B3.67 B3.37 B
Gross Margin23.0722.5721.4520.3220.3819.9

Northrop Grumman ESG Sustainability

Some studies have found that companies with high sustainability scores are getting higher valuations than competitors with lower social-engagement activities. While most ESG disclosures are voluntary and do not directly affect the long term financial condition, Northrop Grumman's sustainability indicators can be used to identify proper investment strategies using environmental, social, and governance scores that are crucial to Northrop Grumman's managers, analysts, and investors.
Environment Score
Governance Score
Social Score

About Northrop Grumman Fundamental Analysis

The Macroaxis Fundamental Analysis modules help investors analyze Northrop Grumman Corp's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of Northrop Grumman using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Northrop Grumman Corp based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
Please read more on our fundamental analysis page.
Northrop Grumman Corporation operates as an aerospace and defense company worldwide. The company was founded in 19 and is based in Falls Church, Virginia. Northrop Grumman operates under Aerospace Defense classification in the United States and is traded on New York Stock Exchange. It employs 88000 people.

Northrop Grumman Investors Sentiment

The influence of Northrop Grumman's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in Northrop. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock markets does not have a solid backing from leading economists and market statisticians.
Investor biases related to Northrop Grumman's public news can be used to forecast risks associated with investment in Northrop. The trend in average sentiment can be used to explain how an investor holding Northrop can time the market purely based on public headlines and social activities around Northrop Grumman Corp. Please note that most equiteis that are difficult to arbitrage are affected by market sentiment the most.
Northrop Grumman's market sentiment shows the aggregated news analyzed to detect positive and negative mentions from the text and comments. The data is normalized to provide daily scores for Northrop Grumman's and other traded tickers. The bigger the bubble, the more accurate is the estimated score. Higher bars for a given day show more participation in the average Northrop Grumman's news discussions. The higher the estimate score, the more favorable is the investor's outlook on Northrop Grumman.

Northrop Grumman Implied Volatility

    
  32.43  
Northrop Grumman's implied volatility exposes the market's sentiment of Northrop Grumman Corp stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Northrop Grumman's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Northrop Grumman stock will not fluctuate a lot when Northrop Grumman's options are near their expiration.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards Northrop Grumman in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, Northrop Grumman's short interest history, or implied volatility extrapolated from Northrop Grumman options trading.

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Additionally, see Northrop Grumman Piotroski F Score and Northrop Grumman Altman Z Score analysis. Note that the Northrop Grumman Corp information on this page should be used as a complementary analysis to other Northrop Grumman's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Bond Directory module to find actively traded corporate debentures issued by US companies.

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Is Northrop Grumman's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Northrop Grumman. If investors know Northrop will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Northrop Grumman listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth YOY
-0.056
Market Capitalization
74.2 B
Quarterly Revenue Growth YOY
-0.038
Return On Assets
0.11
Return On Equity
0.46
The market value of Northrop Grumman Corp is measured differently than its book value, which is the value of Northrop that is recorded on the company's balance sheet. Investors also form their own opinion of Northrop Grumman's value that differs from its market value or its book value, called intrinsic value, which is Northrop Grumman's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Northrop Grumman's market value can be influenced by many factors that don't directly affect Northrop Grumman's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Northrop Grumman's value and its price as these two are different measures arrived at by different means. Investors typically determine Northrop Grumman value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Northrop Grumman's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.