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Northrop Grumman (NOC) Gains But Lags Market: What You Should Know

Zacks Equity Research

Northrop Grumman (NOC) closed at $367.93 in the latest trading session, marking a +1.11% move from the prior day. The stock lagged the S&P 500's daily gain of 1.27%. At the same time, the Dow added 1.25%, and the tech-heavy Nasdaq gained 1.48%.

Heading into today, shares of the defense contractor had gained 5.3% over the past month, outpacing the Aerospace sector's gain of 1.69% and the S&P 500's loss of 4.37% in that time.

Wall Street will be looking for positivity from NOC as it approaches its next earnings report date. 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, the Zacks Consensus Estimate for revenue is projecting net sales of $8.55 billion, up 5.7% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $19.63 per share and revenue of $34.01 billion, which would represent changes of -7.97% and +13.01%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for NOC. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.14% higher within the past month. NOC is holding a Zacks Rank of #2 (Buy) right now.

Investors should also note NOC's current valuation metrics, including its Forward P/E ratio of 18.54. This represents a premium compared to its industry's average Forward P/E of 17.97.

Meanwhile, NOC's PEG ratio is currently 1.49. 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 1.79 based on yesterday's closing prices.

The Aerospace - Defense industry is part of the Aerospace sector. This group has a Zacks Industry Rank of 30, putting it in the top 12% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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