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Northrop Grumman (NOC) Tops on Q2 Earnings, Ups' 17 EPS View

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Northrop Grumman Corporation (NOC - Free Report) reported second-quarter 2017 earnings of $3.15 per share, beating the Zacks Consensus Estimate of $2.84 by 10.9%. Reported earnings were also up 10.5% from $2.85 recorded in the year-ago quarter.

Total Revenue

In second-quarter 2017, Northrop Grumman reported total revenue of $6.38 billion, beating the Zacks Consensus Estimate of $6.21 billion by 2.7%. Revenues also increased 6.3% from the year-ago figure of $6 billion. The revenue upside was primarily driven by a 14.2% increase in Aerospace systems sales.

Northrop Grumman Corporation Price, Consensus and EPS Surprise

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

Segmental Details

Aerospace Systems: Segment sales of $2.97 billion increased 14.2% year over year as a result of higher volumes of manned aircraft programs. Strong autonomous systems and space sales also benefitted this segment.

Operating income also rose 1% to $315 million, while operating margin contracted 140 basis points (bps) to 10.6%.

Mission Systems: Segment sales increased 3.4% to $2.78 billion due to higher sales volume of Sensors and Processing systems.

Operating income improved 6.6% to $374 million, while operating margin expanded 40 bps to 13.4%.

Technology Services: Sales at the segment dropped 3.1% to $2.78 billion, driven by lower sales for System Modernization and Services programs as well as Advanced Defense Services programs.

Operating income increased 2.3% to $134 million while operating margin expanded 60 bps to 11.4%.

Operational Update

Total operating cost and expenses at the end of the quarter was $5.52 billion, up 6.1%.

Operating income during the quarter also increased 7.3% to $0.9 billion.

Financial Condition

Northrop Grumman’s cash and cash equivalents as of Jun 30, 2017 were $1.38 billion, down from $2.54 billion as of Dec 31, 2016.

Long-term debt (net of current portion) as of Jun 30, 2017, was $6.21 billion, down from $7.06 billion as of 2016 end.

Net cash outflow from operating activities as of Jun 30, 2017 was $68 million compared with the year-ago figure of $544 million.

2017 Guidance

Northrop Grumman currently expects to generate revenues lower than $25 billion during 2017 compared with its earlier guidance of approximately $25 billion. On the bottom-line front, the company has raised its outlook. Northrop Grumman now expects to generate earnings in the range of $12.10–$12.40 compared with the earlier guidance range of $11.80–$12.10.

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

Zacks Rank

Northrop Grumman currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Peer Releases

Lockheed Martin Corp. (LMT - Free Report) reported second-quarter 2017 earnings from continuing operations of $3.23 per share, beating the Zacks Consensus Estimate of $3.10 by 4.2%. Earnings also surpassed the year-ago period’s bottom-line figure by 10.2%.

Textron Inc. (TXT - Free Report) reported second-quarter 2017 adjusted earnings from continuing operations of 60 cents per share, beating the Zacks Consensus Estimate of 55 cents by 9.1%.

The Boeing Company (BA - Free Report) reported adjusted earnings of $2.55 per share for second-quarter 2017, beating the Zacks Consensus Estimate of $2.32 by 9.9%. In the year-ago quarter, the company had reported a loss of 44 cents.

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