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Northrop Grumman (NOC) Tops Q1 Earnings, Hikes EPS View

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Northrop Grumman Corporation NOC reported first-quarter 2017 earnings of $3.63 per share, beating the Zacks Consensus Estimate of $2.90 by 25.2%. Reported earnings were also up 20% from $3.03 recorded in the year-ago quarter.

Northrop Grumman Corporation Price, Consensus and EPS Surprise

Northrop Grumman Corporation Price, Consensus and EPS Surprise | Northrop Grumman Corporation Quote

Total Revenue

In the first quarter of 2017, Northrop Grumman reported total revenue of $6.27 billion, beating the Zacks Consensus Estimate of $6.12 billion by 2.5%. Revenues also increased 5.2% from the year-ago figure of $5.96 billion. The revenue upside was driven by a 13% increase in Aerospace systems sales.

Segmental Details

Aerospace Systems: Segment sales of $2.90 billion increased 13% year over year as a result of higher volumes for manned aircraft and increased F-35 deliveries.

Operating income also improved 9% to $312 million, while operating margin contracted 30 basis points (bps) to 11.8%.

MissionSystems: Segment sales increased 2% to $2.74 billion due to higher sales volume for Sensors and Processing systems.

Operating income remained flat at $353 million, while operating margin declined 20 bps to 12.9%.

Technology Services: Sales at the segment dropped 2% to $1.19 billion, driven by lower sales for System Modernization and Services programs and Advanced Defense Services programs.

Operating income increased 4% to $131 million while operating margin improved 60 bps to 11%.

Operational Update

Total operating cost and expenses at the end of the quarter was $5.44 billion, up 4.2%.

Operating income during the quarter also increased 12.6% to $0.8 billion.

Financial Condition

Northrop Grumman’s cash and cash equivalents as of Mar 31, 2017 were $1.40 billion, down from $2.54 billion as of Dec 31, 2016.

Long-term debt (net of current portion) as of Mar 31, 2017, was $7.06 billion, almost same as2016 end.

Net cash outflow from operating activities as of Mar 31, 2016 was $439 million, compared with the year-ago figure of $60 million.

2017 Guidance

Northrop Grumman continues to expect revenues of $25 billion during 2017. On the bottom-line front, the company has raised its outlook. Northrop Grumman now expects to generate earnings in the range of $11.80–$12.10, compared to earlier guidance range of $11.30–$11.60.

Also, the company maintains its free cash flow guidance in the range of $1.8–$2 billion.

Zacks Rank

Northrop Grumman currently has a Zacks Rank #2 (Buy).You can seethe complete list of today’s Zacks #1 Rank stocks here.

Recent Peer Releases

Textron Inc. TXT reported first-quarter 2017 adjusted earnings from continuing operations of 46 cents per share, in line with the Zacks Consensus Estimate. Total revenue in the quarter was $3.09 billion, missing the Zacks Consensus Estimate by 2.6%.

Rockwell Collins Inc. COL reported financial results for second-quarter fiscal 2017, wherein its adjusted earnings per share of $1.34 surpassed the Zacks Consensus Estimate by 2.3%. Total sales were $1,342 million, which beat the Zacks Consensus Estimate of $1,330 million by 0.9%.

Lockheed Martin Corp. (LMT - Free Report) reported first-quarter 2017 earnings from continuing operations of $3 per share, beating the Zacks Consensus Estimate by 8.7%. However, total revenue of $11.06 billion missed the Zacks Consensus Estimate by 1.8%.

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