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Northrop Grumman (NOC) Q2 Earnings: What's in the Cards?
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Northrop Grumman Corporation (NOC - Free Report) is scheduled to release second-quarter 2018 results on Jul 25, before the opening bell.
In the prior quarter, the company reported a positive earnings surprise of 15.98%. Impressively, Northrop Grumman outperformed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 13.87%.
Let’s discuss the factors influencing Northrop Grumman’s quarterly results, in brief.
Order Growth — a Key Catalyst
In the second quarter, the company witnessed strong growth in order flow from the Pentagon as well as foreign allies of the United States, thereby reflecting solid demand enjoyed for its varied products.
Among the contract wins, the significant ones are the $866 million multiple-line item contract for providing depot-level sustainment services and modification projects for the Ballistic Missile Early Warning systems and PAVE Phased Array Warning system radars, and the $210 million contract for providing Large Aircraft Infrared Counter Measures (LAIRCM) equipment and support.
The company was also successful in clinching orders worth $153 million from Japan for its Hawkeye Aircraft and a $62 million contract for Broad Area Maritime Surveillance-Demonstrator (BAMS-D) unmanned aircraft system.
Such contract wins are likely to boost Northrop Grumman’s second-quarter revenues. In line with this, the Zacks Consensus Estimate for the company’s second-quarter revenues is pegged at $7 billion, reflecting annual growth of approximately 9.8%.
Northrop Grumman Corporation Price and EPS Surprise
The company’s total sales growth historically benefited from higher sales at the Mission Systems segment. We expect the upcoming quarterly result to continue reflecting this trend.
In line with this, the Zacks Consensus Estimate for the company’s Mission Systems segment’s revenues stands firm at $2,969 million, reflecting an annual increase of 9.3%. Notably, the company’s increased focus on ramping up its early phase development programs and volume enhancements on several production programs should drive this segment’s growth in the soon-to-be reported quarter.
During the first quarter earnings call, Northrop Grumman increased its earnings guidance for 2018, with expectations to deliver strong margin rates and operating income growth at its segments. Considering this, we may expect the company’s second-quarter results to reflect a solid bottom-line performance as well. In line with this, the Zacks Consensus Estimate for second-quarter earnings is pegged at $3.83 per share, reflecting a 21.6% increase year over year.
In May 2018, Northrop Grumman’s board of directors approved a 9% hike in its quarterly common stock dividend, taking the annualized payout to $4.80 per share. The raised dividend indicates the company’s optimism on generating solid cash flow from operating activities, which we believe will get reflected in its yet-to-be reported quarterly results.
Earnings Whispers
Our proven model does not show that Northrop Grumman Corporation is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Northrop Grumman has an Earnings ESP of -1.18%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Northrop Grumman sports a Zacks Rank #1, which increases the probability of earnings beat. But when combined with a negative earnings ESP, the Zacks Rank #1 makes surprise prediction difficult.
Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are few companies in the Aerospace sector that have the right combination of elements to post an earnings beat this quarter.
FLIR Systems is expected to report second-quarter results on Jul 25. The company has an Earnings ESP of +1.03% and a Zacks Rank #2.
Embraer SA (ERJ - Free Report) has an Earnings ESP of +26.12% and a Zacks Rank #3. The company is slated to release second-quarter results on Jul 27.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Northrop Grumman (NOC) Q2 Earnings: What's in the Cards?
Northrop Grumman Corporation (NOC - Free Report) is scheduled to release second-quarter 2018 results on Jul 25, before the opening bell.
In the prior quarter, the company reported a positive earnings surprise of 15.98%. Impressively, Northrop Grumman outperformed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 13.87%.
Let’s discuss the factors influencing Northrop Grumman’s quarterly results, in brief.
Order Growth — a Key Catalyst
In the second quarter, the company witnessed strong growth in order flow from the Pentagon as well as foreign allies of the United States, thereby reflecting solid demand enjoyed for its varied products.
Among the contract wins, the significant ones are the $866 million multiple-line item contract for providing depot-level sustainment services and modification projects for the Ballistic Missile Early Warning systems and PAVE Phased Array Warning system radars, and the $210 million contract for providing Large Aircraft Infrared Counter Measures (LAIRCM) equipment and support.
The company was also successful in clinching orders worth $153 million from Japan for its Hawkeye Aircraft and a $62 million contract for Broad Area Maritime Surveillance-Demonstrator (BAMS-D) unmanned aircraft system.
Such contract wins are likely to boost Northrop Grumman’s second-quarter revenues. In line with this, the Zacks Consensus Estimate for the company’s second-quarter revenues is pegged at $7 billion, reflecting annual growth of approximately 9.8%.
Northrop Grumman Corporation Price and EPS Surprise
Northrop Grumman Corporation Price and EPS Surprise | Northrop Grumman Corporation Quote
Other Factors to Consider
The company’s total sales growth historically benefited from higher sales at the Mission Systems segment. We expect the upcoming quarterly result to continue reflecting this trend.
In line with this, the Zacks Consensus Estimate for the company’s Mission Systems segment’s revenues stands firm at $2,969 million, reflecting an annual increase of 9.3%. Notably, the company’s increased focus on ramping up its early phase development programs and volume enhancements on several production programs should drive this segment’s growth in the soon-to-be reported quarter.
During the first quarter earnings call, Northrop Grumman increased its earnings guidance for 2018, with expectations to deliver strong margin rates and operating income growth at its segments. Considering this, we
may expect the company’s second-quarter results to reflect a solid bottom-line performance as well. In line with this, the Zacks Consensus Estimate for second-quarter earnings is pegged at $3.83 per share, reflecting a 21.6% increase year over year.
In May 2018, Northrop Grumman’s board of directors approved a 9% hike in its quarterly common stock dividend, taking the annualized payout to $4.80 per share. The raised dividend indicates the company’s optimism on generating solid cash flow from operating activities, which we believe will get reflected in its yet-to-be reported quarterly results.
Earnings Whispers
Our proven model does not show that Northrop Grumman Corporation is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Northrop Grumman has an Earnings ESP of -1.18%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Northrop Grumman sports a Zacks Rank #1, which increases the probability of earnings beat. But when combined with a negative earnings ESP, the Zacks Rank #1 makes surprise prediction difficult.
Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are few companies in the Aerospace sector that have the right combination of elements to post an earnings beat this quarter.
Curtiss-Wright Corporation (CW - Free Report) has an Earnings ESP of +0.15% and a Zacks Rank #2. The company is expected to report second-quarter results on Jul 25. You can see the complete list of today’s Zacks #1 Rank stocks here.
FLIR Systems is expected to report second-quarter results on Jul 25. The company has an Earnings ESP of +1.03% and a Zacks Rank #2.
Embraer SA (ERJ - Free Report) has an Earnings ESP of +26.12% and a Zacks Rank #3. The company is slated to release second-quarter results on Jul 27.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>