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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 $372.28, marking a +0.54% move from the previous day. This move lagged the S&P 500's daily gain of 0.67%. At the same time, the Dow added 0.74%, and the tech-heavy Nasdaq gained 0.81%.

Coming into today, shares of the defense contractor had gained 6.19% in the past month. In that same time, the Aerospace sector lost 0.13%, while the S&P 500 gained 3.55%.

Investors will be hoping for strength from NOC as it approaches its next earnings release, which is expected to be January 30, 2020. On that day, NOC is projected to report earnings of $4.78 per share, which would represent a year-over-year decline of 3.04%. Our most recent consensus estimate is calling for quarterly revenue of $8.83 billion, up 8.24% from the year-ago period.

It is also important to note the recent changes to analyst estimates for NOC. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Within the past 30 days, our consensus EPS projection has moved 0.39% higher. NOC is currently sporting a Zacks Rank of #2 (Buy).

Digging into valuation, NOC currently has a Forward P/E ratio of 16.09. This represents a discount compared to its industry's average Forward P/E of 18.09.

Meanwhile, NOC's PEG ratio is currently 1.23. 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. The Aerospace - Defense industry currently had an average PEG ratio of 2.35 as of yesterday's close.

The Aerospace - Defense industry is part of the Aerospace sector. This group has a Zacks Industry Rank of 21, putting it in the top 9% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

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

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