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Northrop Grumman (NOC) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research

In the latest trading session, Northrop Grumman (NOC) closed at $345.90, marking a -0.81% move from the previous day. This change lagged the S&P 500's daily gain of 0.86%. Elsewhere, the Dow gained 0.79%, while the tech-heavy Nasdaq added 0.73%.

Coming into today, shares of the defense contractor had lost 1.42% in the past month. In that same time, the Aerospace sector lost 0.8%, while the S&P 500 gained 1.94%.

Wall Street will be looking for positivity from NOC as it approaches its next earnings report date. The company is expected to report EPS of $4.78, down 3.04% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $8.83 billion, up 8.24% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $20.38 per share and revenue of $33.97 billion, which would represent changes of -4.45% and +12.88%, 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. 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.

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. Within the past 30 days, our consensus EPS projection remained stagnant. NOC is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, NOC currently has a Forward P/E ratio of 17.11. This represents a discount compared to its industry's average Forward P/E of 18.03.

It is also worth noting that NOC currently has a PEG ratio of 1.31. 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. Aerospace - Defense stocks are, on average, holding a PEG ratio of 2.1 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 63, which puts it in the top 25% 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.

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

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