We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Lower Expenses Aid Northrop Grumman (NOC) in Q3 Earnings?
Read MoreHide Full Article
Northrop Grumman Corp. (NOC - Free Report) is scheduled to release third-quarter 2021 results on Oct 28, before the opening bell.
The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 13.08%. The mixed performance delivered by its segments is likely to get reflected in the upcoming earnings release.
Let's take a closer look at the factors likely to have impacted the company’s performance.
Mixed Segment Performance
While strong sales of its manned aircraft are expected to have boosted Northrop’s Aeronautics Systems unit’s top-line performance in the third quarter, lower A350 production activity compared to the prior-year period might have had an adverse impact on the same.
The Zacks Consensus Estimate for this segment’s revenues, pegged at $2,892 million, indicates a slip of 0.8% from the prior-year quarter’s reported figure.
Northrop Grumman Corporation Price and EPS Surprise
Its Space Systems segment is expected to have delivered a strong performance once again in the third quarter, driven by continued ramp-up on the GBSD program. The Zacks Consensus Estimate for this segment’s revenues, pegged at $2,539 million, indicates an improvement of 7.3% from the prior-year quarter’s reported figure.
However, the absence of its IT service business, which Northrop had divested in February, has been hurting its Defense Systems segment’s performance. A similar trend is expected to have impacted this unit’s third-quarter revenues.
The Zacks Consensus Estimate for this segment’s revenues, pegged at $1,422 million, indicates a deterioration of 23.5% from the prior-year quarter’s reported figure.
So, the effect of segmental performance on the company’s overall sales figure in the third quarter is likely to have been mixed.
The Zacks Consensus Estimate for the company’s third-quarter 2021 sales is pegged at $8.84 billion, indicating a 2.6% decline from the year-ago quarter’s reported figure.
Earnings Expectation
Lower corporate unallocated expenses driven by state tax changes are expected to have benefited the company’s bottom-line performance in the third quarter. However, a higher federal tax rate along with the impact of the IT services divestiture might have marred the effect of the favorable factors, thereby impacting its earnings performance.
Notably, the Zacks Consensus Estimate for third-quarter earnings is pegged at $5.93 per share, suggesting a mere 0.7% increase from the year-ago quarter’s reported figure.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Northrop Grumman this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here.
Northrop Grumman has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a couple of defense companies you may want to consider, as these have the right combination of elements to post an earnings beat this season:
Image: Bigstock
Will Lower Expenses Aid Northrop Grumman (NOC) in Q3 Earnings?
Northrop Grumman Corp. (NOC - Free Report) is scheduled to release third-quarter 2021 results on Oct 28, before the opening bell.
The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 13.08%. The mixed performance delivered by its segments is likely to get reflected in the upcoming earnings release.
Let's take a closer look at the factors likely to have impacted the company’s performance.
Mixed Segment Performance
While strong sales of its manned aircraft are expected to have boosted Northrop’s Aeronautics Systems unit’s top-line performance in the third quarter, lower A350 production activity compared to the prior-year period might have had an adverse impact on the same.
The Zacks Consensus Estimate for this segment’s revenues, pegged at $2,892 million, indicates a slip of 0.8% from the prior-year quarter’s reported figure.
Northrop Grumman Corporation Price and EPS Surprise
Northrop Grumman Corporation price-eps-surprise | Northrop Grumman Corporation Quote
Its Space Systems segment is expected to have delivered a strong performance once again in the third quarter, driven by continued ramp-up on the GBSD program. The Zacks Consensus Estimate for this segment’s revenues, pegged at $2,539 million, indicates an improvement of 7.3% from the prior-year quarter’s reported figure.
However, the absence of its IT service business, which Northrop had divested in February, has been hurting its Defense Systems segment’s performance. A similar trend is expected to have impacted this unit’s third-quarter revenues.
The Zacks Consensus Estimate for this segment’s revenues, pegged at $1,422 million, indicates a deterioration of 23.5% from the prior-year quarter’s reported figure.
So, the effect of segmental performance on the company’s overall sales figure in the third quarter is likely to have been mixed.
The Zacks Consensus Estimate for the company’s third-quarter 2021 sales is pegged at $8.84 billion, indicating a 2.6% decline from the year-ago quarter’s reported figure.
Earnings Expectation
Lower corporate unallocated expenses driven by state tax changes are expected to have benefited the company’s bottom-line performance in the third quarter. However, a higher federal tax rate along with the impact of the IT services divestiture might have marred the effect of the favorable factors, thereby impacting its earnings performance.
Notably, the Zacks Consensus Estimate for third-quarter earnings is pegged at $5.93 per share, suggesting a mere 0.7% increase from the year-ago quarter’s reported figure.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Northrop Grumman this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here.
Northrop Grumman has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a couple of defense companies you may want to consider, as these have the right combination of elements to post an earnings beat this season:
Transdigm Group (TDG - Free Report) has an Earnings ESP of +0.36% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
CAE Inc (CAE - Free Report) has an Earnings ESP of +9.46% and a Zacks Rank #3.
Huntington Ingalls (HII - Free Report) has an Earnings ESP of +3.59% and a Zacks Rank #2.