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What Northrop Grummans (NOC) Estimates Say About Its Recent Performance
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Northrop Grumman’s (NOC - Free Report) March quarter was a bit of a mixed bag. While revenue missed estimates by less than a percent and grew from the year-ago quarter by a mere 3.6%, its earnings were a bit more encouraging, growing 8.6% to beat the Zacks Consensus Estimate by 2.5%.
Segmental revenue beats/misses may not exactly reflect the result on the total revenue line because not every analyst providing total estimates also provides the line details. But they are still indicative of how the company did in any given quarter:
Accordingly, Aeronautics Systems revenue of $2.703 billion beat estimates by 1.3%; Defense Systems revenue of $1.283 billion missed by 10.9%; Mission Systems revenue of $2.497 billion missed by 3.7% and Space Systems revenue of $2.855 billion beat by 4.9%. Net intersegment eliminations of -$541 million missed by 5%.
Analyst estimates are generally a good indication of the results a company is likely to report in any given quarter. That is because analysts study various aspects of the business including the major drivers of its growth, the internal strengths and weaknesses, the cost base on which it operates, pricing strength and so forth to arrive at projections of its future performance. Hence, these projections are studied opinions that can be depended upon.
And because they can be depended upon, investors develop a certain expectation about a company’s performance based on the estimates for the concerned period. And when a company significantly underperforms or outperforms estimates, there is usually a reaction from investors that is represented in the share prices. In this case, investors were largely unmoved, sending shares down -0.8%.
Drilling further down into the numbers reveals more about Northrop Grumman’s quarterly performance.
Accordingly, we see that all except the Aeronautics business performed below analyst expectations. While Aeronautics operating income beat estimates by 16.1%, Defense, Mission and Space segments missed by a respective 6.4%, 0.6% and 5.6%. The intersegment loss was also greater than expected.
Conclusion
From the above it is clear that Northrop Grumman’s overall performance was more or less in line with what analysts expected with the aeronautics segment being the main outperformer, both in terms of revenue and profitability.
Zacks Rank
Northrop has a Zacks #3 (Hold) Rank, based on its current risk/reward profile, but #2 (Buy) ranked Huntington Ingalls Industries (HII - Free Report) is a better option for investors looking for exposure to the industry right now.
Price Performance Year-to-Date
Image Source: Zacks Investment Research
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What Northrop Grummans (NOC) Estimates Say About Its Recent Performance
Northrop Grumman’s (NOC - Free Report) March quarter was a bit of a mixed bag. While revenue missed estimates by less than a percent and grew from the year-ago quarter by a mere 3.6%, its earnings were a bit more encouraging, growing 8.6% to beat the Zacks Consensus Estimate by 2.5%.
Segmental revenue beats/misses may not exactly reflect the result on the total revenue line because not every analyst providing total estimates also provides the line details. But they are still indicative of how the company did in any given quarter:
Accordingly, Aeronautics Systems revenue of $2.703 billion beat estimates by 1.3%; Defense Systems revenue of $1.283 billion missed by 10.9%; Mission Systems revenue of $2.497 billion missed by 3.7% and Space Systems revenue of $2.855 billion beat by 4.9%. Net intersegment eliminations of -$541 million missed by 5%.
Analyst estimates are generally a good indication of the results a company is likely to report in any given quarter. That is because analysts study various aspects of the business including the major drivers of its growth, the internal strengths and weaknesses, the cost base on which it operates, pricing strength and so forth to arrive at projections of its future performance. Hence, these projections are studied opinions that can be depended upon.
And because they can be depended upon, investors develop a certain expectation about a company’s performance based on the estimates for the concerned period. And when a company significantly underperforms or outperforms estimates, there is usually a reaction from investors that is represented in the share prices. In this case, investors were largely unmoved, sending shares down -0.8%.
Drilling further down into the numbers reveals more about Northrop Grumman’s quarterly performance.
Accordingly, we see that all except the Aeronautics business performed below analyst expectations. While Aeronautics operating income beat estimates by 16.1%, Defense, Mission and Space segments missed by a respective 6.4%, 0.6% and 5.6%. The intersegment loss was also greater than expected.
Conclusion
From the above it is clear that Northrop Grumman’s overall performance was more or less in line with what analysts expected with the aeronautics segment being the main outperformer, both in terms of revenue and profitability.
Zacks Rank
Northrop has a Zacks #3 (Hold) Rank, based on its current risk/reward profile, but #2 (Buy) ranked Huntington Ingalls Industries (HII - Free Report) is a better option for investors looking for exposure to the industry right now.
Price Performance Year-to-Date
Image Source: Zacks Investment Research