Will Segment Revenues Aid Northrop's (NOC) Q3 Earnings?
Northrop Grumman Corporation NOC is scheduled to report its third-quarter 2023 results on Oct 26 before market open.
Northrop has a four-quarter earnings surprise of 4.38%, on average. Growth in revenues in most of its operating segments is likely to have aided the overall top line. However, higher labor costs and supply-chain disruption may have impacted the bottom line in the third quarter.
Aeronautics Systems’ Sales to Remain Sluggish
Lower volumes on E-2 and F/A-18 and the Joint Surveillance and Target Attack Radar System are likely to have dampened the third-quarter revenue performance of the Aeronautics Systems segment.
The Zacks Consensus Estimate for Aeronautics Systems’ third-quarter revenues is pegged at $2,486 million, indicating a decline of 2% from the year-ago quarter’s reported revenues.
Defense Systems’ Revenues to Remain Solid
Higher volumes from the Integrated Air and Missile Defense Battle Command System program and ammunition programs, along with a ramp-up on the Hypersonic Attack Cruise Missile and advanced fuze programs, are likely to have aided the Defense unit’s revenue performance in the third quarter of 2023.
The Zacks Consensus Estimate for Defense Systems’ third-quarter revenues is pegged at $1,445 million, implying growth of 7.5% from the year-ago quarter’s reported revenues.
Mission Systems, a Key Contributor to Revenues
Higher sales from the Networked Information Solutions business area and higher volumes on marine systems programs and the Surface Electronic Warfare Improvement Program are likely to have favorably impacted Mission Systems’ revenue performance in the soon-to-be-reported quarter.
The Zacks Consensus Estimate for Mission System’s third-quarter revenues is pegged at $2,701 million, indicating a rise of 10% from the year-ago quarter’s reported revenues.
Space Systems to Remain Robust
The Space System business unit’s revenues are likely to have been positively impacted by the ramp-up of development programs in Launch & Strategic Missiles and higher volumes from the Next Generation Interceptor and Ground-based Midcourse Defense Weapon Systems programs. Higher volumes from restricted programs are also expected to have added impetus to the segment's revenues in the soon-to-be-reported quarter.
The Zacks Consensus Estimate for Space System’s third-quarter revenues is pegged at $3,456 million, suggesting an increase of 9.3% from the year-ago quarter’s reported revenues.
Backlog Projections Show Strength
Our model suggests the third-quarter backlog of NOC to improve by 3.7% to $82.58 billion from the prior-year reported figure. This indicates strength in its business operations that fuels the demand for its products.
Northrop Grumman Corporation Price and EPS Surprise
Northrop Grumman Corporation price-eps-surprise | Northrop Grumman Corporation Quote
Third-Quarter Estimates
The strength across the majority of its business unit’s sales performance, along with the positive impact of rising global defense budget-induced order growth and backlog strength in the recent past, is likely to have benefited NOC’s overall third-quarter top line. The Zacks Consensus Estimate for its third-quarter sales is pegged at $9.67 billion, indicating an increase of 7.8% from the prior-year reported figure.
A strong top line may have benefited the overall earnings of Northrop. However, labor market tightness and supply-chain disruptions may have aggregated the total cost of the company, thus dampening the bottom line of Northrop in the third quarter of 2023.
The Zacks Consensus Estimate for its third-quarter earnings is pegged at $5.77 per share, implying a decrease of 2% from the prior-year reported figure.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Northrop this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.
Northrop has an Earnings ESP of +1.53% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are three other defense companies you may want to consider as these also have the right combination of elements to post an earnings beat this season:
L3Harris Technologies, Inc. LHX has an Earnings ESP of +0.86% and a Zacks Rank #3. The long-term earnings growth rate of LHX is 2.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for L3Harris’s third-quarter earnings, pegged at $3.07 per share, indicates a decline of 5.8% from the prior-year reported figure. The Zacks Consensus Estimate for LHX’s sales suggests a growth rate of 13.7% from the prior-year reported figure.
RTX Corporation RTX has an Earnings ESP of +1.65% and a Zacks Rank #3. RTX delivered a four-quarter average earnings surprise of 7.90%.
The Zacks Consensus Estimate for RTX’s third-quarter sales is pegged at $18.71 billion, suggesting a growth rate of 10.4% from the prior-year reported figure. The Zacks Consensus Estimate for its third-quarter earnings stands at $1.19 per share.
General Dynamics Corporation GD has an Earnings ESP of +0.61% and a Zacks Rank #3. General Dynamics delivered an earnings surprise of 2.99% in the last four quarters, on average.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $9.94 billion, suggesting a 0.4% decline from the year-ago quarter. The Zacks Consensus Estimate for third-quarter earnings is pegged at $2.87 per share, indicating a decline of 11.9% from the prior-year reported figure.
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Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
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