NOC - Northrop Grumman Is Back in the Warship Building Business
2024-05-18 07:07:00 ET
Thirteen years ago, military aerospace and shipbuilding giant Northrop Grumman (NYSE: NOC) made the strategic decision to jettison its shipbuilding unit and focus its business on aerospace instead. At the time of the spinoff, the rejected unit, Huntington Ingalls (NYSE: HII) , was valued at approximately $2.5 billion in market capitalization, leaving the rest of Northrop Grumman with about a $14 billion market cap.
Today, Northrop Grumman is a $70 billion defense business worth five times its price 13 years ago. Huntington Ingalls stock has performed well too, but is up a bit less than 5x in value. Looked at that way, maybe Northrop Grumman didn't necessarily need to spin off its shipbuilding unit, but at least it didn't suffer from the decision. And Northrop may even have performed a bit better without its shipbuilding business than it would have, with it.
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Northrop Grumman Is Back in the Warship Building Business