Northrop (NOC) Beats on Q3 Earnings, Ups '23 Sales View
Northrop Grumman Corporation NOC reported third-quarter 2023 earnings of $6.18 per share, which beat the Zacks Consensus Estimate of $5.81 by 6.4%. The bottom line also increased 5% from $5.89 per share recorded in the year-ago quarter.
Total Sales
NOC’s total sales of $9.78 billion beat the Zacks Consensus Estimate of $9.67 billion by 1.1%. The top line also increased 9% from $8.97 billion in the year-ago quarter. This improvement can be attributed to the strong demand for its products and services.
Northrop Grumman Corporation Price, Consensus and EPS Surprise
Northrop Grumman Corporation price-consensus-eps-surprise-chart | Northrop Grumman Corporation Quote
Backlog Count
The company’s total backlog was pegged at $83.93 billion at the end of the third quarter of 2023 compared with $78.81 billion at the end of the second quarter of 2023.
Segmental Details
Aeronautics Systems: This segment’s sales of $2,766 million rose 9% year over year due to higher volumes of Manned Aircraft.
The unit’s operating income went up 8% to $283 million, whereas the operating margin contracted 10 basis points (bps) to 10.2%.
Mission Systems: Sales in this segment increased 7% to $2,628 million. This was due to higher restricted sales in the Networked Information Solutions business area and higher volumes on the marine systems program.
The unit’s operating income increased 5% to $386 million, while the operating margin contracted 30 bps to 14.7%.
Defense Systems: This segment’s sales increased 6% to $1,421 million. This was driven by higher sales volumes from Battle Management & Missile Systems.
The unit’s operating income rose 15% to $182 million, while the operating margin expanded 110 bps to 12.8%.
Space Systems: Sales in this segment rose 11% to $3,506 million, driven by higher sales from the Launch & Strategic Missiles and Space business areas.
The segment’s operating income increased 8% to $312 million, while the operating margin contracted 30 bps to 8.9%.
Operational Update
The company’s operating income during the quarter improved 20% to $1,016 million due to higher segment operating income, lower unallocated corporate expenses and a reduction in the FAS/CAS operating adjustment.
Financial Condition
Northrop Grumman’s cash and cash equivalents as of Sep 30, 2023 were $2,082 million, down from $2,577 million as of Dec 31, 2022.
Long-term debt (net of the current portion) was $13,793 million compared with $11,805 million as of Dec 31, 2022.
Northrop’s net cash flow from operating activities as of Sep 30, 2023 was $1,445 million compared with $650 million as of Sep 30, 2022.
2023 Guidance
Northrop Grumman raised sales guidance for 2023 and reaffirmed its other financial guidance.
The company currently expects revenues of $39 billion, up from the earlier guidance range of $38.40-$38.80 billion for 2023. The Zacks Consensus Estimate is pegged at $38.76 billion, which is lower than the company’s guided sales.
The company continues to expect adjusted earnings in the range of $22.45-$22.85 per share. The Zacks Consensus Estimate is pegged at $22.68 per share, which lies higher than the midpoint of the company’s guided range.
NOC continues to expect adjusted free cash flow in the range of $1.85-$2.15 billion.
Zacks Rank
Northrop currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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