VOL. XCIV, NO. 247
★ MOAT STOCKS & COMPETITIVE ADVANTAGES ★
PRICE: 5 CENTS
Friday, December 26, 2025
Northrop Grumman Corporation
NOC · New York Stock Exchange
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
Northrop Grumman Corporation is a U.S. aerospace and defense contractor organized into Aeronautics Systems, Defense Systems, Mission Systems, and Space Systems. Its moat is anchored in U.S. government contracting relationships, the compliance/clearance infrastructure required for restricted programs, and long-cycle platforms where integration and qualification create switching costs. The business is exposed to appropriations volatility and competitive recompetes, and pricing is largely governed by negotiated contract structures. Market cap was about $83.11B as of 2025-12-24 (closing; source: https://www.finhacker.cz/en/stocks/northrop-grumman-market-cap/).
Primary segment
Aeronautics Systems
Market structure
Oligopoly
Market share
—
HHI: —
Coverage
4 segments · 6 tags
Updated 2025-12-26
Segments
Aeronautics Systems
Military aircraft systems (manned & unmanned) plus sustainment/modernization
Revenue
28.7%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Defense Systems
Strategic deterrence, tactical weapons, missile defense, and related sustainment/training services
Revenue
18.8%
Structure
Oligopoly
Pricing
weak
Share
—
Peers
Mission Systems
Defense electronics: C4ISR, sensors, electronic warfare, advanced microelectronics, cyber
Revenue
24.9%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Space Systems
National security space systems, missile defense, and space/launch propulsion components
Revenue
27.6%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Moat Claims
Aeronautics Systems
Military aircraft systems (manned & unmanned) plus sustainment/modernization
Revenue share is implied from FY2024 external sales: (12,030 - 243) / 41,033. Operating profit share is implied from FY2024 external segment operating income: (1,182 - 25) / 4,544. Source: FY2024 Form 10-K (filed 2025-01-30).
Government Contracting Relationships
Legal
Government Contracting Relationships
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Deep relationships and track record across major U.S. Air Force/Navy aircraft programs (e.g., B-21 development/production, B-2 sustainment) support repeat awards and follow-on work.
Erosion risks
- Budget and appropriations volatility
- Program cancellation or quantity changes
- Recompetes and bid protests
Leading indicators
- Aeronautics backlog trend
- Net awards on major aircraft programs
- DoD budget lines for B-21 and ISR platforms
Counterarguments
- Major new aircraft programs are competitively bid; incumbency does not guarantee future awards.
Design In Qualification
Demand
Design In Qualification
Strength: 4/5 · Durability: durable · Confidence: 3/5 · 2 evidence
Platform integration and qualification cycles are long; once designed into programs (airframes/subsystems), switching primes or major suppliers is slow and costly.
Erosion risks
- Technology shifts toward new architectures
- Manufacturing or quality issues driving cost overruns
- Government-directed platform mix changes
Leading indicators
- EAC adjustment frequency
- Milestone performance vs schedule
- Recompete outcomes for sustainment lots
Counterarguments
- Government can compete recompetes and mandate second sources, especially after performance issues.
Compliance Advantage
Legal
Compliance Advantage
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Execution of restricted/classified work and operating under FAR/CAS and routine DCAA audits creates a compliance barrier for smaller/new entrants.
Erosion risks
- Security incidents or clearance losses
- Compliance failures or adverse audit findings
- Regulatory changes increasing cost
Leading indicators
- DCAA audit outcomes
- Security clearance workforce availability
- Compliance-related investigations
Counterarguments
- Other large primes have similar clearance and compliance infrastructure; advantage is relative, not absolute.
Defense Systems
Strategic deterrence, tactical weapons, missile defense, and related sustainment/training services
Revenue share is implied from FY2024 external sales: (8,560 - 855) / 41,033. Operating profit share is implied from FY2024 external segment operating income: (866 - 106) / 4,544. Source: FY2024 Form 10-K (filed 2025-01-30).
Government Contracting Relationships
Legal
Government Contracting Relationships
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Positioned on large, mission-critical U.S. programs (e.g., Sentinel ICBM modernization, IBCS) that can drive long program lifecycles and follow-on work.
Erosion risks
- Program termination or restructuring
- Budget instability and continuing resolutions
- Competitive recompetes and protests
Leading indicators
- Backlog and net awards for Sentinel/IBCS
- DoD budget appropriations for strategic programs
- Win rate on competitive munitions lots
Counterarguments
- The U.S. government can delay, modify, or cancel procurements and can terminate contracts for convenience.
Design In Qualification
Demand
Design In Qualification
Strength: 4/5 · Durability: durable · Confidence: 3/5 · 2 evidence
Strategic deterrence and missile defense programs require extensive qualification, security, and integration; switching suppliers mid-program is difficult.
Erosion risks
- Government-directed second sourcing
- Schedule slips or technical setbacks
- Changes in threat environment shifting priorities
Leading indicators
- Major milestone attainment (EMD, LRIP/FRP)
- Cost and schedule performance vs plan
- Recompete and protest outcomes
Counterarguments
- Competitors can win future increments/blocks even if a contractor is established on earlier phases.
Capacity Moat
Supply
Capacity Moat
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Specialized propulsion, weapons, and strategic systems manufacturing requires certified capacity and industrial base readiness; scaling new capacity can be slow.
Erosion risks
- Competitor capacity expansion
- Supply chain disruptions for energetic materials
- Regulatory constraints on production
Leading indicators
- Lead times for propulsion components
- Supplier health and on-time delivery metrics
- Capital investment announcements for munitions capacity
Counterarguments
- Government can fund additional suppliers and expand capacity across the industrial base.
Mission Systems
Defense electronics: C4ISR, sensors, electronic warfare, advanced microelectronics, cyber
Revenue share is implied from FY2024 external sales: (11,399 - 1,177) / 41,033. Operating profit share is implied from FY2024 external segment operating income: (1,598 - 181) / 4,544. Source: FY2024 Form 10-K (filed 2025-01-30).
Switching Costs General
Demand
Switching Costs General
Strength: 4/5 · Durability: durable · Confidence: 3/5 · 2 evidence
Mission systems are deeply embedded into platforms and workflows (radar, EW, C4ISR); requalification and integration costs raise switching costs.
Erosion risks
- Rapid technology cycles in electronics
- Open-architecture mandates increasing interchangeability
- Cyber vulnerabilities damaging trust
Leading indicators
- Program renewals and follow-on awards
- Gross margin/operating margin stability
- Competitive wins/losses on major sensor programs
Counterarguments
- Government can mandate modular/open systems to enable multi-vendor competition and upgrades.
Compliance Advantage
Legal
Compliance Advantage
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Meaningful share of restricted/classified work plus security-cleared workforce creates barrier to entry and supports participation in sensitive missions.
Erosion risks
- Security incidents affecting clearances
- Talent shortages in cleared engineering roles
- Regulatory changes on classified handling
Leading indicators
- Cleared headcount and hiring/retention
- Compliance/audit findings
- Classified program award activity
Counterarguments
- Other primes and specialized defense electronics firms also maintain cleared workforces.
Capex Knowhow Scale
Supply
Capex Knowhow Scale
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 2 evidence
Advanced microelectronics, EW, and cyber capabilities benefit from scale in R&D, test infrastructure, and specialized engineering talent.
Erosion risks
- Commoditization of some electronics
- Export controls limiting addressable market
- R&D productivity declines
Leading indicators
- R&D spend and program wins in microelectronics
- Unit cost/yield on microelectronics programs
- Customer satisfaction and recompete outcomes
Counterarguments
- Nimble specialists can out-innovate large primes in fast-moving electronics and software domains.
Space Systems
National security space systems, missile defense, and space/launch propulsion components
Revenue share is implied from FY2024 external sales: (11,731 - 412) / 41,033. Operating profit share is implied from FY2024 external segment operating income: (1,254 - 44) / 4,544. Source: FY2024 Form 10-K (filed 2025-01-30).
Government Contracting Relationships
Legal
Government Contracting Relationships
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Strong positioning in national security space and missile defense programs with long development/production timelines (e.g., OPIR, SATCOM, missile defense).
Erosion risks
- Budget shifts and program reprioritization
- Competitive pressure in certain space markets
- Technical failures or launch mishaps impacting trust
Leading indicators
- Space Systems backlog and net awards
- DoD/NRO/NASA budget lines for key programs
- On-orbit and program milestone performance
Counterarguments
- Space procurement has seen increasing competition, including non-traditional entrants, and pricing pressure in some domains.
Compliance Advantage
Legal
Compliance Advantage
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Material restricted/classified content and government security restrictions create barriers, especially in sensitive national security space missions.
Erosion risks
- Security breaches or IT incidents
- Changes in classification scope reducing barrier
- Compliance failures increasing oversight
Leading indicators
- Restricted program award activity
- Security incident disclosures
- Audit and compliance outcomes
Counterarguments
- Large incumbents (and some specialized space contractors) also maintain comparable classified capabilities.
Capacity Moat
Supply
Capacity Moat
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 2 evidence
Specialized solid rocket motor and booster production for civil and defense programs benefits from certified industrial capacity and long qualification cycles.
Erosion risks
- Competitor investments in propulsion
- Program delays reducing volume and learning benefits
- Policy shifts toward alternative propulsion architectures
Leading indicators
- Order rates for SRMs/boosters
- Capacity utilization and lead times
- NASA/DoD launch and missile programs cadence
Counterarguments
- If volumes fall or programs change, specialized capacity can become underutilized and lose cost advantage.
Evidence
Aeronautics Systems is a leader in the design, development, production... of military aircraft systems.
Shows sector positioning and program focus with U.S. military customers.
Sales to the U.S. government accounted for 87 percent... in 2024.
Highlights the centrality of U.S. government contracting relationships.
Key characteristics... include long operating cycles.
Supports long qualification/operating cycles typical of major defense programs.
Development and production of the U.S. Air Force B-21 Raider...
Example of a long-duration development/production program where qualification and integration matter.
We are prohibited... from publicly discussing the details of classified programs.
Indicates classified/restricted program environment and associated barriers.
Showing 5 of 22 sources.
Risks & Indicators
Erosion risks
- Budget and appropriations volatility
- Program cancellation or quantity changes
- Recompetes and bid protests
- Technology shifts toward new architectures
- Manufacturing or quality issues driving cost overruns
- Government-directed platform mix changes
Leading indicators
- Aeronautics backlog trend
- Net awards on major aircraft programs
- DoD budget lines for B-21 and ISR platforms
- EAC adjustment frequency
- Milestone performance vs schedule
- Recompete outcomes for sustainment lots
Curation & Accuracy
This directory blends AI‑assisted discovery with human curation. Entries are reviewed, edited, and organized with the goal of expanding coverage and sharpening quality over time. Your feedback helps steer improvements (because no single human can capture everything all at once).
Details change. Pricing, features, and availability may be incomplete or out of date. Treat listings as a starting point and verify on the provider’s site before making decisions. If you spot an error or a gap, send a quick note and I’ll adjust.