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Northrop (NOC) Beats on Q3 Earnings, Sales; Lifts '16 View

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Northrop Grumman Corporation (NOC - Free Report) reported third-quarter 2016 adjusted earnings of $3.02 per share, beating the Zacks Consensus Estimate of $2.81 by 7.5%. Reported earnings were also up 25.3% from $2.41 recorded in the year-ago quarter.

Excluding after-tax pension adjustments, earnings came in at $3.35, up 21.8% year over year.

Total Revenue

In the third quarter of 2016, Northrop Grumman reported total revenue of $6,155 million, beating the Zacks Consensus Estimate of $5,981 million by 2.9%. Revenues also increased 2.9% from the year-ago figure of $5,979 million.

NORTHROP GRUMMN Price, Consensus and EPS Surprise

 

NORTHROP GRUMMN Price, Consensus and EPS Surprise | NORTHROP GRUMMN Quote

Quarterly Segmental Details

Aerospace Systems: Segment sales of $2.78 billion increased 9% year over year on the back of higher volumes for the manned aircraft and autonomous systems programs.

Operating income also improved 4% to $312 million, while operating margin contracted 50 basis points (bps) to 11.2% due to a less favorable performance of the manned aircraft on account of changes in contract mix.

Mission Systems: Segment sales dropped 1% to $2.7 billion due to lower volumes for the Advanced Capabilities programs as well as the Sensors and Processing programs.

Operating income also declined 1% to $351 million on account of lower sales while operating margin remained flat at 13%.

Technology Services: Sales at the segment were $1.19 billion, almost flat. Lower volume for Advanced Defense Services was offset by higher volume for Systems Modernization and Services programs and Global Logistics and Modernization programs.

Operating income rose 2% to $130 million, while operating margin expanded 20 bps to 10.9%.

 



Operational Update

Total operating cost and expenses in the third quarter was $5.3 billion, up 2.7%.

Operating income during the quarter also increased 4% to $0.8 billion.

Financial Condition

Northrop Grumman’s cash and cash equivalents as of Sep 30, 2016 were $1.10 billion, compared with $2.32 billion as of Dec 31, 2015.

Long-term debt (net of current portion) as of Sep 30, 2016, was $6.39 billion, almost in line with the figure as of Dec 31, 2015.

Net cash from operating activities as of Sep 3, 2016 was $1.28 billion, compared with the year-ago period’s figure of $0.53 billion.

2016 Guidance

Northrop Grumman raised its 2016 revenue expectations to the range of $23.9–$24.1 billion, from the previous $23.5 –$24.0 billion.

The company also raised its guidance for diluted earnings per share to the band of $11.55–$11.75 from the prior projection of $10.75–$11.00.

However, the company reiterated its free cash flow guidance at $1.5–$1.8 billion.

Other Aerospace & Defense Releases

Rockwell Collins Inc. reported results for fourth-quarter fiscal 2016 ended Sep 30. The company’s adjusted earnings per share of $1.58 surpassed the Zacks Consensus Estimate of $1.57 by 0.6%. Reported earnings also improved 14.5% from $1.38 a year ago. It has a Zacks Rank #4 (Sell).

Honeywell International Inc. (HON - Free Report) reported third-quarter 2016 adjusted earnings of $1.67 per share, comfortably beating the Zacks Consensus Estimate and the year-ago equivalent figure of $1.60 by 4.4%. The company has a Zacks Rank #4.  

Lockheed Martin Corp. (LMT - Free Report) reported third-quarter 2016 earnings of $3.61 per share, surpassing the Zacks Consensus Estimate of $2.86 by 26.2%. Earnings also increased 49.2% from the year-ago level. It has a Zacks Rank #4.

Zacks Rank

Northrop currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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