The Motley Foolยท2025-04-16 01:20Core Viewpoint - Northrop Grumman is outperforming Boeing in the defense sector, particularly in the development of stealth aircraft, raising questions about the relative investment potential of their stocks [1][6]. Group 1: Boeing's Recent Developments - Boeing won a $20 billion contract to build the U.S. Air Force's first sixth-generation stealth fighter, the F-47, announced by President Trump [2]. - Following the announcement, Boeing's stock peaked at $182 but has since dropped over 10%, raising concerns about investor confidence despite the contract's potential value [2][3]. - Historical performance issues, such as Boeing's struggles with the KC-46 Pegasus program, have led to skepticism regarding its ability to manage large contracts effectively [4][5]. Group 2: Northrop Grumman's Performance - Northrop Grumman has been recognized for its effective management of a $55 billion contract to produce 100 B-21 stealth bombers, achieving cost reductions of $1 billion and projecting total costs to be 28% below initial forecasts [7][9]. - The B-21 program is reportedly on schedule, with the first prototype completed in late 2022 and initial production starting in January 2024 [9]. - Northrop Grumman's financial metrics are favorable compared to Boeing, with trailing earnings of $4.2 billion and positive free cash flow of $2.6 billion, while Boeing reported negative earnings and cash flow [12]. Group 3: Investment Considerations - Investors may favor Northrop Grumman over Boeing due to its profitability, lower debt levels, and the fact that it pays a dividend, unlike Boeing [12]. - The potential for Boeing to face cost overruns on the F-47 contract could lead the Air Force to reconsider its contracts in favor of Northrop Grumman [10].