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Northrop Grumman (NOC) Q1 Earnings Beat, Revenues Rise Y/Y

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Northrop Grumman Corporation (NOC - Free Report) reported first-quarter 2021 earnings of $6.57 per share, which exceeded the Zacks Consensus Estimate of $5.48. Moreover, the bottom line rose 27.6% from the year-ago quarter’s $5.15.

Total Sales

Northrop Grumman reported total sales of $9,157 million for the first quarter, surpassing the Zacks Consensus Estimate of $8,528 million. Further, revenues increased 6% from the year-ago quarter’s $8,620 million. This year-over-year upside was primarily driven by increases in Aeronautics Systems sales, Space Systems sales and Mission Systems sales.

Backlog Count

Northrop Grumman’s total backlog stood at $79.3 billion at the end of first-quarter 2021 compared with the $81 billion witnessed at the end of 2020. Of the total backlog, $35.5 billion was funded.

Segmental Details

Aeronautics Systems: Segment sales of $2,990 million grew 5% year over year on higher manned aircraft sales.

Operating income improved 17% to $308 million, while operating margin expanded 100 basis points (bps) to 10.3%.

Mission Systems: Segment sales increased 10% to $2,589 million driven by higher sales volume from airborne multi-function sensors and networks, along with maritime/land systems and sensor programs.

Operating income rose 12% to $397 million, with operating margin expanding 30 bps to 15.3%.

Defense Systems: Sales at this segment declined 17% to $1,562 million due to a reduction in sales related to the IT services divestiture.

Operating income fell 11% to $177 million, while operating margin expanded 80 bps to 11.3%.

Space Systems: Space Systems’ quarterly sales increased 29% to $2,521 million owing to higher sales in both the Launch & Strategic Missiles and Space business areas.

The segment’s operating income jumped 37% to $276 million, while operating margin expanded 50 bps to 10.9%.

Operational Update

Total operating costs and expenses at the end of the first quarter were $8,315 million, up 8.2% year over year.

Operating income during the quarter surged 202.1% year over year to $2,822 million.

Northrop Grumman Corporation Price, Consensus and EPS Surprise

Financial Condition

Northrop Grumman’s cash and cash equivalents, as of Mar 31, 2021, were $3,517 million, down from $4,907 million, as of Dec 31, 2020.

Long-term debt (net of current portion), as of Mar 31, 2021, was $12,764 million, up from $14,261 million, as of the end of 2020.

Net cash outflow from operating activities, as of Mar 31, 2021, was $66 million compared with $993 million, as of Mar 31, 2020.

2021 Guidance

Northrop Grumman has raised its 2021 revenue and earnings guidance.

The company currently expects to generate revenues in the range of $35.3-$35.7 billion compared with the prior guided range of $35.0-$35.4 billion during 2021. The Zacks Consensus Estimate of $35.5 billion lies at the mid-point of the company’s guided range.

The company’s ongoing-year earnings are currently projected to be in the range of $24-$24.50 per share compared with the previous band of $21.80-$22.20 per share. The Zacks Consensus Estimate of $23.60 is lower than the company’s guided range.

The company estimates free cash flow of $2.20-$2.50 billion in 2021.

Zacks Rank

Northrop Grumman currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Lockheed Martin Corp. (LMT - Free Report) delivered first-quarter 2021 earnings of $6.56 per share, which surpassed the Zacks Consensus Estimate of $6.32.

Hexcel Corporation (HXL - Free Report) reported first-quarter 2021 loss of 10 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 16 cents.

Raytheon Technologies Corporation’s (RTX - Free Report) first-quarter 2021 adjusted earnings per share of 90 cents outpaced the Zacks Consensus Estimate of 88 cents.

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