Northrop Grumman Corporation is a company based in the United States. The company designs, manufactures, and sells defense products and equipment around the world. The company designs and sells products like aeronautics systems, missle systems, various defense systems, and a growing sector of space systems. The company was founded in 1939.
Why You Should?
- Northrop Grumman is a great reopening play in an investor’s portfolio. The company saw a drop in demand for some of its products as some countries around the world focused spending money and resources on the pandemic instead of defense. However, once this pandemic is over, the company will see rising demand.
- Northrop Grumman is a safe investment option in an investor’s portfolio due to the essential nature of the products that it sells. Many governments will still spend money on defense products during economic down turns as it is a great way to improve national security and maintain jobs. This will benefit the company and its investors.
- Northrop Grumman will continue to see positive impacts from a Biden administration. the current administration not only looks to keep defense spending high but it also looks to sign massive trade deals with other allies. This will help Northrop Grumman sell more defense products internationally. This will also benefit investors in the company.
- The company will continue to see higher defense spending from countries around the world due to the unfortunate increased military tensions in the Middle East and Russia. This will help the company see faster growth and better operating results. This will also benefit investors in the company.
- The company has seen rising revenues and profits over the past couple of financial years due to the reasons mentioned above. This will help the company further grow its operations and improve its product offerings. This will also benefit investors in the company. In the financial year of 2020, the company reported revenues of around 36.8 billion and profits of around 3.19 billion. Both of these metrics are higher than what the company reported in the financial year of 2019 when they had revenues of around 33.84 billion and profits of around 2.25 billion.
Why You Should Not?
- The company faces tough competition in the defense industry. Some of these competitors include L3 Harris, Lockheed Martin, Raytheon Technologies, and Boeing. This competition might hurt the company and its investors in the future.
- The company has been negatively impacted by the pandemic. As countries around the world slow defense spending in favor for pandemic spending, the company will see weaker international sales until this pandemic is over for everyone. Other issues caused by the pandemic include supply chain issues and plant closures. This has hurt the company and investors.
I think that Northrop Grumman is a great long-term investment due to its positon as a good reopening play, positive impacts from a Biden administration, rising revenues and profits, more military tensions, and its position as a safe investment option. However, tough competition and negative impacts from the pandemic might hurt the company and its investors.