Despite Full Valuations for U.S. Defense Majors, It's Time to Hold 'Em, Not Fold 'Em
It's a strange time for the U.S. defense majors we cover: We're sitting at peak historical multiples, but the six-year upcycle we forecast in U.S. defense spending will not be as steep as previous upturns, and our average price/fair value estimate for U.S. defense majors sits at 1.06, indicating few bargains. Although defense budgets are headed higher, we're skeptical when we hear claims of historic defense spending increases; we anticipate only average annual growth of roughly 3% through 2021. ...Northrop Grumman is a security company. The company's segments include: Aerospace Systems, which is engaged in the design, development, integration and production of manned aircraft, autonomous systems, spacecraft, high-energy laser systems, microelectronics and other systems and subsystems; Innovation Systems, which is engaged in the design, development, integration and production of flight, armament and space systems; Mission Systems, which is engaged in end-to-end mission solutions and multifunction systems; and Technology Services, which is engaged in delivering solutions and services in support of mission-critical networks and systems.
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Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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