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Falls Church, Virginia-headquartered Northrop Grumman Corporation (NOC) pioneers technologies at the edge of every frontier to connect, advance and protect the U.S. and its allies. Valued at $66.3 billion by market cap, Northrop focuses on solving toughest problems in space, aeronautics, defense and cyberspace to meet the ever-evolving needs of its customers.
The defense giant is expected to release its fourth-quarter earnings before the market opens on Thursday, Jan. 30. Ahead of the event, analysts expect Northrop to report a profit of $6.24 per share, marginally down from $6.27 per share reported in the year-ago quarter. However, the company has a robust earnings surprise history. It has surpassed Wall Street’s bottom-line estimates in each of the past four quarters. Its EPS for the last reported quarter surged 13.3% year-over-year to $7.00, exceeding analysts’ estimates by 15.3%.
For the full fiscal 2024, analysts expect Northrop to deliver an EPS of $25.93, up 11.3% from $23.29 in fiscal 2023. While in fiscal 2025, its earnings are expected to grow 7.3% year-over-year to $27.81.
NOC stock prices have dipped 3.7% over the past year, substantially underperforming the S&P 500 Index’s ($SPX) 25.8% surge and the Industrial Select Sector SPDR Fund’s (XLI) 18.7% gains during the same time frame.
Northrop Grumman stock rose 1.4% after the release of its Q3 results on Oct. 24, driven primarily by the positive earnings surprise. However, the company’s total sales grew by a modest 2.3% year-over-year to approximately $10 billion which missed Wall Street’s topline expectations. Nonetheless, Northrop’s focus on curbing operating expenses resulted in an 81-basis point operating margin expansion to 11.2% and a substantial 10.2% year-over-year growth in operating profits to over $1.1 billion.
Furthermore, Northrop’s year-to-date operating cash flow surged 25.3% year-over-year to $1.8 billion. And recently on Dec. 11, the company announced authorization of an additional $3 billion for the share repurchase, increasing the outstanding authorized amount to approximately $4.2 billion, demonstrating its confidence in the company's valuation.
The consensus opinion on NOC stock is moderately bullish, with an overall “Moderate Buy” rating. Out of the 18 analysts covering the stock, six recommend “Strong Buy,” one suggests “Moderate Buy,” nine advise “Hold,” and two advocate “Strong Sell” rating. Its mean price target of $560.85 indicates a staggering 24% upside potential from current price levels.
