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Why Is Northrop Grumman (NOC) Up 8% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Northrop Grumman Corporation (NOC - Free Report) . Shares have added nearly 8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Northrop Grumman Earnings and Revenues Top in Q4
Northrop Grumman reported fourth-quarter 2016 adjusted earnings of $2.66 per share, beating the Zacks Consensus Estimate of $2.49 by 6.8%. Reported earnings were also up 22% from $2.18 recorded in the year-ago quarter.
Excluding after-tax pension adjustments, earnings came in at $2.96, up 18.9% year over year.
For full-year 2016, the company reported adjusted earnings of $11.05 per share, which missed the Zacks Consensus Estimate of $11.73 by 5.8%.
Total Revenue
In the fourth quarter of 2016, Northrop Grumman reported total revenue of $6.40 billion, beating the Zacks Consensus Estimate of $5.91 billion by 8.3%. Revenues also increased 12.3% from the year-ago figure of $5.69 billion.
For 2016, Northrop Grumman reported total revenue of $24.51 billion, beating the Zacks Consensus Estimate of $24.04 billion by 1.96%.
Segmental Details
Aerospace Systems: Segment sales of $2.87 billion increased 19.7% year over year on the back of higher volumes for the manned aircraft and autonomous systems programs.
Operating income also improved 18.5% to $327 million, while operating margin contracted 10 basis points (bps) to 11.4%. Higher operating income was driven by gain on a property sale and improved performance by Autonomous Systems programs.
Mission Systems: Segment sales improved 9% to $2.85 billion due to higher sales volume across all reporting areas.
Operating income also increased 7.4% to $390 million on account of higher sales volume and gain on the sale of a commercial cyber business. Meanwhile, operating margin declined 20 bps to 13.7%.
Technology Services: Sales at the segment were $1.21 billion, up 7.8%, driven by higher sales volume across all reporting areas.
Operating income remained flat at $125 million while operating margin declined 90 bps to 10.3%.
Operational Update
Total operating cost and expenses at the end of 2016 was $21.32 billion, up 4.2%.
Operating income during 2016 also increased 3.8% to $3.19 billion.
Financial Condition
Northrop Grumman’s cash and cash equivalents as of Dec 31, 2016 were $2.54 billion, up from $2.32 billion as of Dec 31, 2015.
Long-term debt (net of current portion) as of Dec 31, 2016, was $7.06 billion, up from $6.39 billion as of Dec 31, 2015.
Net cash from operating activities as of Dec 31, 2016 was $2.81 billion, compared with the year-ago figure of $2.16 billion.
2017 Guidance
Northrop Grumman expects revenues of $25 billion during 2017. On the bottom-line front, the company expects to generate earnings in the range of $11.30–$11.60.
Also, the company maintains its free cash flow guidance in the range of $1.8–$2 billion.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Northrop Grumman's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Notably the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Northrop Grumman (NOC) Up 8% Since the Last Earnings Report?
It has been about a month since the last earnings report for Northrop Grumman Corporation (NOC - Free Report) . Shares have added nearly 8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Northrop Grumman Earnings and Revenues Top in Q4
Northrop Grumman reported fourth-quarter 2016 adjusted earnings of $2.66 per share, beating the Zacks Consensus Estimate of $2.49 by 6.8%. Reported earnings were also up 22% from $2.18 recorded in the year-ago quarter.
Excluding after-tax pension adjustments, earnings came in at $2.96, up 18.9% year over year.
For full-year 2016, the company reported adjusted earnings of $11.05 per share, which missed the Zacks Consensus Estimate of $11.73 by 5.8%.
Total Revenue
In the fourth quarter of 2016, Northrop Grumman reported total revenue of $6.40 billion, beating the Zacks Consensus Estimate of $5.91 billion by 8.3%. Revenues also increased 12.3% from the year-ago figure of $5.69 billion.
For 2016, Northrop Grumman reported total revenue of $24.51 billion, beating the Zacks Consensus Estimate of $24.04 billion by 1.96%.
Segmental Details
Aerospace Systems: Segment sales of $2.87 billion increased 19.7% year over year on the back of higher volumes for the manned aircraft and autonomous systems programs.
Operating income also improved 18.5% to $327 million, while operating margin contracted 10 basis points (bps) to 11.4%. Higher operating income was driven by gain on a property sale and improved performance by Autonomous Systems programs.
Mission Systems: Segment sales improved 9% to $2.85 billion due to higher sales volume across all reporting areas.
Operating income also increased 7.4% to $390 million on account of higher sales volume and gain on the sale of a commercial cyber business. Meanwhile, operating margin declined 20 bps to 13.7%.
Technology Services: Sales at the segment were $1.21 billion, up 7.8%, driven by higher sales volume across all reporting areas.
Operating income remained flat at $125 million while operating margin declined 90 bps to 10.3%.
Operational Update
Total operating cost and expenses at the end of 2016 was $21.32 billion, up 4.2%.
Operating income during 2016 also increased 3.8% to $3.19 billion.
Financial Condition
Northrop Grumman’s cash and cash equivalents as of Dec 31, 2016 were $2.54 billion, up from $2.32 billion as of Dec 31, 2015.
Long-term debt (net of current portion) as of Dec 31, 2016, was $7.06 billion, up from $6.39 billion as of Dec 31, 2015.
Net cash from operating activities as of Dec 31, 2016 was $2.81 billion, compared with the year-ago figure of $2.16 billion.
2017 Guidance
Northrop Grumman expects revenues of $25 billion during 2017. On the bottom-line front, the company expects to generate earnings in the range of $11.30–$11.60.
Also, the company maintains its free cash flow guidance in the range of $1.8–$2 billion.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Northrop Grumman Corporation Price and Consensus
Northrop Grumman Corporation Price and Consensus | Northrop Grumman Corporation Quote
VGM Scores
At this time, Northrop Grumman's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Notably the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.