When the market is a minefield, laced with rate cut whispers, inflation jitters, and political crossfire, investors scramble for stability. Lately, with tariffs threatening to reignite inflation and the Federal Reserve stuck in a no-win scenario, Wall Street’s been caught between fear and opportunity. That’s where Jim Cramer, Mad Money’s outspoken host, finds his stride. 

Amid the chaos, Cramer is pounding the table on defense stocks. He sees military deals as diplomatic tools and defense spending as steady, strategic, politically untouchable, and largely immune to market mood swings.

That’s why Cramer recently zeroed in on Northrop Grumman (NOC), a powerhouse in missile systems, surveillance tech, and stealth aircraft. But NOC has not exactly flown high lately. Weighed down by delayed government contracts, margin pressures, and investor skepticism over defense budget shifts, the stock is more than 10% off its year-to-date high. 

Still, Cramer sees the relative weakness as a chance. With global tensions not exactly cooling off, should investors trust his call and buy NOC stock now?

About Northrop Grumman Stock

With a market cap of $69.4 billion, Virginia-based Northrop Grumman (NOC) has been shaping advanced military tech since 1939. Known for its cutting-edge work in autonomous systems, cybersecurity, space, and next-gen weapons, it supplies the U.S. and key allies with mission-critical innovations.

NOC stock is up 3.7% on a YTD basis and 0.3% over the past 52 weeks. 

Digging Into Northrop Grumman’s Q1 Earnings

Northrop Grumman reported its first quarter earnings results on April 22. Its total sales declined 6.6% year-over-year to $9.5 billion, falling short of Wall Street projections, largely due to weakness in its space and aeronautics systems. Its EPS plunged 47% annually to $3.32 – another miss - while operating income cratered 46%, hit hard by a $477 million loss provision on the B-21 bomber program and softer space systems performance.

Space segment sales sank 18% year-over-year, with classified projects and next-gen missile initiatives stalling. Aeronautics wasn’t spared either, down 8% on lower B-21 demand. Defense Systems was the lone bright spot, rising 4% thanks to the Sentinel missile and strong munitions activity. 

Cash flow was another sore point. Free cash flow dropped 87% to $1.8 billion, while net cash used in operations hit $1.6 billion, down 122% year-over-year. 

While the company’s core remains strong, the quarter exposed some cracks in the armor, and investors took notice.

Northrop locked in $10.8 billion in new awards during the quarter, lifting its backlog to a hefty $92.8 billion. A 1.45 international book-to-bill ratio signals momentum beyond U.S. borders, reinforcing global demand as a pillar of future growth. Management remains confident it can ramp up sales in the back half of the year if contract awards normalize.

Margins Miss, Tariffs Bite, Outlook Shifts

Northrop Grumman’s rocky Q1 was driven by delayed government contract awards and a hefty charge tied to its B-21 bomber program. CEO Kathy Warden pointed to a turbulent U.S. defense budget landscape, especially the continuing resolution that delayed funding decisions, as a core reason sales and margins fell short. The B-21 loss stemmed from costlier manufacturing, material needs, and process changes meant to fast-track production.

Q1 stumbles also highlight deeper undercurrents shaping the defense landscape. As U.S. defense contractors navigate a strained supply chain, President Donald Trump’s revived trade war rhetoric adds more friction. Tariffs are inflating costs and compounding operational complexity, just as manufacturers like Northrop try to accelerate production.

While some analysts point to a bigger U.S. defense budget as a cushion, geopolitical tensions tell another story. Frustrated by unpredictable trade policies and protectionist moves, several nations are rethinking their defense procurement strategies. Notably, the European Union has laid out plans to build up its defense infrastructure and reduce reliance on American weapons by 2030, a strategic shift that could dent future U.S. export growth.

Looking forward, the company reaffirmed its 2025 revenue forecast, estimating it to be between $42 billion and $42.5 billion. Northrop also called for FCF between $2.85 billion and $3.25 billion and trimmed its EPS outlook to $24.95 to $25.35 due to the B-21 setback. Despite near-term headwinds, like tariff uncertainty and space segment softness, Northrop sees innovation and global defense demand as the engines to power through. 

What Do Analysts Expect for Northrop Grumman Stock?

Overall, analysts have deemed the defense stock a “Moderate Buy.” Out of the 20 analysts covering the stock, 11 recommend a “Strong Buy,” one advises a “Moderate Buy,” and the remaining eight suggest a “Hold.” 

NOC’s mean price target of $543.81 implies the stock has upside potential of 12% from the current price. The Street-high target of $604 suggests the stock could rally as much as 25%.

In light of the earnings miss and sharply reduced profit outlook, Northrop Grumman’s latest report has prompted a reset in investor sentiment. 

Still, Jim Cramer sees opportunity in the dip, framing NOC not as a moonshot but a defense hedge built for volatile times. But until a fresh catalyst emerges - either from contract wins, margin recovery, or a space rebound - caution may dominate the outlook.