America’s fifth-biggest defense contractor isn’t so easy for outsiders to understand. Although Northrop Grumman has many powerful technology franchises, some of the most important are secret, and others involve selling equipment to prime contractors rather than the government. However, it’s pretty clear that CEO Wes Bush has found a formula that is likely to keep investors happy in hard times, because several analysts have recently rated Northrop’s stock a “buy” despite all the gloom and doom about budget sequestration. The key to Bush’s formula is to focus the company on high-margin, well-positioned businesses and then buy back shares, so that static revenues can produce rising returns per share. That’s a very different approach from looking for new business overseas or in commercial markets, one that is likely to boost shareholder results faster. None of this would be possible, though, if Northrop Grumman didn’t have world-class franchises in signals intelligence, electronic warfare, electro-optical sensors, airborne radar, unmanned aircraft and cybersecurity. I have written a commentary for Forbes that can be read here.