What's In Store For Northrop Grumman (NOC) In Q2 Earnings?
Zacks Investment Research | Jul 23, 2017 09:15PM ET
Defense giant, Northrop Grumman Corporation (NYSE:NOC) is scheduled to release second-quarter 2017 results on Jul 26, before the opening bell. Being one of the largest U.S. defense contractors, it enjoys a strong presence in the U.S. Air Force, Space and Cyber Security programs.
In the prior quarter, the company reported a positive earnings surprise of 25.17%. It is worth noting that Northrop Grumman has outperformed the Zacks Consensus Estimate in all the trailing four quarters, the average positive surprise being 10.87%.
Let’s see how things are shaping up for the company prior to this announcement.
Factors to Consider
Northrop Grumman’s better-than-expected first-quarter results demonstrated improved segment operating income, supported by strong sales growth and solid program performance. Similar outperformance can be expected in the soon-to-be-reported second quarter’s results as well.
The company consistently follows a stable capital deployment strategy. In line with this, during the second quarter, Northrop Grumman hiked its quarterly dividend by 11%, bringing the annualized payout to $4 per share. This reflected the strong balance sheet and steady cash flow position that the company boasts. This, in turn, offers it substantial financial flexibility to invest in business and scope for incremental dividends.
Further, the company won a handful of notable contracts in the second quarter. These include the $303.9 million modification deal for procurement of three low-rate initial production of second lot’s MQ-4C Triton unmanned aircraft, the $243.9 million contract for providing 72 Active Electronically Scanned Array (AESA) radars and spares, and the foreign military sales (FMS) deal worth $179 million for providing hardware for large aircraft infrared counter measures (LAIRCM) and necessary support related to it. Such contracts will surely get reflected in terms of Northrop Grumman’s solid revenue growth in the second quarter and beyond.
Moreover, the company identified a growing list of domestic and international opportunities across its businesses. This comprises the Ground Based Strategic Deterrent program,MQ-25 unmanned aerial system, new Space programs and a variety of international opportunities for Autonomous Systems as well as upgrading Lockheed Martin’s F-16 jets with its SABR Radar. It also includes additional international opportunities pursued by its Technology Services segment in the Middle East and Australia. Further updates on these opportunities can be expected once Northrop Grumman reports its second-quarter results.
On the flip side, the company continues to witness lower sales volume for its KC-10 program, which dragged down its revenue from Technology Services in the first quarter. With no improvement anticipated soon in this issue, we expect the second-quarter results to reflect a similar sales decline for the segment.
For the second quarter, the Zacks Consensus Estimate for earnings is pegged at $2.84 per share, up 9.32% year over year, while the revenue estimate of $6.21 billion implies a 3.57% year-over-year improvement.
Earnings Whispers
Our proven model does not conclusively show that Northrop Grumman is likely to beat earnings this quarter. This is because a stock needs to have both a positive Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.