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Northrop Grumman to Report Q3 Earnings: What's in the Cards?

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Northrop Grumman Corporation (NOC - Free Report) is scheduled to release third-quarter 2018 results on Oct 24, before the opening bell.

In the last reported quarter, the company delivered a positive earnings surprise of 2.61%. Impressively, Northrop Grumman outperformed the Zacks Consensus Estimate in the trailing four quarters, with the average positive surprise being 11.79%.

Earnings Whispers

Our proven model shows that Northrop Grumman Corporation is unlikely to beat earnings estimates in the to-be-reported quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Earnings ESP: Northrop Grumman has an Earnings ESP of -0.58%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

 

Northrop Grumman Corporation Price and EPS Surprise

 

Zacks Rank: Northrop Grumman carries a Zacks Rank #2, which increases the probability of an earnings beat. However, its negative earnings ESP makes surprise prediction difficult.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors to Consider

Northrop Grumman’s Aerospace Systems is anticipated to be the major top-line contributor, similar to the last reported quarter. For the third qurter, the Zacks Consensus Estimate for this unit is pegged at $3,341 million, reflecting year-over-year growth of 1%.

The completion of the acquisition of Orbital ATK will be beneficial for third-quarter results. Moreover, the assets of Northrop Grumman are well aligned to meet customers’ current and future needs, which will increase booking as well as boost backlog.

Innovation Systems was created post acquisition of Orbital ATK, which boosted the backlog of the company by $8.7 billion at the end of the second quarter. The trend is expected to continue in the to-be-reported quarter as well.

Increase in U.S. defense spending and demand for high-quality products of the company created by the U.S. defense department and its allies will continue to drive performance of the company.

Stocks to Consider

Here are some companies in the Zacks Aerospace sector that have the right combination of elements to post an earnings beat in the quarter to be reported.

The Boeing Company (BA - Free Report) is anticipated to release third-quarter 2018 results on Oct 24. It has an Earnings ESP of +0.39% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

L3 Technologies Inc. is expected to release third-quarter 2018 numbers on Oct 25. It has an Earnings ESP of +0.35% and carries a Zacks Rank #2.

Lockheed Martin (LMT - Free Report) is anticipated to release third-quarter 2018 results on Oct 3. It has an Earnings ESP of +1.56% and a Zacks Rank #3.

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