U.S. Markets closed

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

Zacks Equity Research

Northrop Grumman (NOC) closed at $368.75 in the latest trading session, marking a +0.3% move from the prior day. This change lagged the S&P 500's 0.64% gain on the day. At the same time, the Dow added 0.57%, and the tech-heavy Nasdaq gained 0.6%.

Heading into today, shares of the defense contractor had gained 2.45% over the past month, outpacing the Aerospace sector's gain of 1.67% and the S&P 500's loss of 1.87% in that time.

Investors will be hoping for strength from NOC as it approaches its next earnings release, which is expected to be October 24, 2019. The company is expected to report EPS of $4.74, down 27.52% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $8.55 billion, up 5.7% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $19.64 per share and revenue of $34.01 billion. These totals would mark changes of -7.92% and +13.01%, respectively, from last year.

Any recent changes to analyst estimates for NOC should also be noted by investors. 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. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.06% higher. NOC currently has a Zacks Rank of #2 (Buy).

Investors should also note NOC's current valuation metrics, including its Forward P/E ratio of 18.72. For comparison, its industry has an average Forward P/E of 17.8, which means NOC is trading at a premium to the group.

Meanwhile, NOC's PEG ratio is currently 1.51. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Aerospace - Defense was holding an average PEG ratio of 2.02 at yesterday's closing price.

The Aerospace - Defense industry is part of the Aerospace sector. This industry currently has a Zacks Industry Rank of 19, which puts it in the top 8% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research