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Northrop Grumman (NOC) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Northrop Grumman (NOC) closed the most recent trading day at $349.62, moving -1.87% from the previous trading session. This change lagged the S&P 500's daily loss of 0.39%. Meanwhile, the Dow lost 0.95%, and the Nasdaq, a tech-heavy index, lost 0.83%.

Heading into today, shares of the defense contractor had lost 5.14% over the past month, lagging the Aerospace sector's loss of 3.73% and the S&P 500's loss of 0.1% in that time.

NOC will be looking to display strength as it nears its next earnings release, which is expected to be October 24, 2019. On that day, NOC is projected to report earnings of $4.74 per share, which would represent a year-over-year decline of 27.52%. Meanwhile, our latest consensus estimate is calling for revenue of $8.55 billion, up 5.7% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $19.63 per share and revenue of $33.99 billion, which would represent changes of -7.97% and +12.95%, respectively, from the prior year.

Any recent changes to analyst estimates for NOC should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.03% higher within the past month. NOC is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, NOC is currently trading at a Forward P/E ratio of 18.15. This valuation marks a premium compared to its industry's average Forward P/E of 17.55.

Also, we should mention that NOC has a PEG ratio of 1.46. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Aerospace - Defense stocks are, on average, holding a PEG ratio of 2.01 based on yesterday's closing prices.

The Aerospace - Defense industry is part of the Aerospace sector. This industry currently has a Zacks Industry Rank of 73, which puts it in the top 29% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow NOC in the coming trading sessions, be sure to utilize Zacks.com.

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