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

Zacks Equity Research

In the latest trading session, Northrop Grumman (NOC) closed at $344.91, marking a +0.15% move from the previous day. This move lagged the S&P 500's daily gain of 0.91%. Meanwhile, the Dow gained 1.22%, and the Nasdaq, a tech-heavy index, added 1%.

Heading into today, shares of the defense contractor had gained 0.29% over the past month, lagging the Aerospace sector's gain of 0.88% and the S&P 500's gain of 1.65% in that time.

Wall Street will be looking for positivity from NOC as it approaches its next earnings report date. In that report, analysts expect NOC to post earnings of $4.78 per share. This would mark a year-over-year decline of 3.04%. Meanwhile, our latest consensus estimate is calling for revenue of $8.83 billion, up 8.24% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $20.38 per share and revenue of $33.97 billion. These totals would mark changes of -4.45% and +12.88%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for NOC. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 remained stagnant within the past month. NOC is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, NOC is currently trading at a Forward P/E ratio of 16.9. This valuation marks a discount compared to its industry's average Forward P/E of 17.92.

It is also worth noting that NOC currently has a PEG ratio of 1.29. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Aerospace - Defense stocks are, on average, holding a PEG ratio of 2.09 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 45, which puts it in the top 18% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. 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.

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