Will Segmental Sales Benefit Northrop's (NOC) Q3 Earnings?
Northrop Grumman Corporation NOC is scheduled to report third-quarter 2022 results on Oct 27 before market open.
Northrop has a four-quarter earnings surprise of 3.92%, on average. The strong revenue performance across most of its segments is likely to contribute to the company’s overall results in the soon-to-be-reported quarter.
Aeronautics Systems – a Drag on Revenues
Lower volumes in manned aircraft and autonomous systems might have unfavorably contributed to the third-quarter revenue performance of the segment. This might have resulted in lower revenues from the segment in the third quarter.
The Zacks Consensus Estimate for Aeronautics Systems’ revenues in the third quarter is pegged at $2,712 million, indicating a decline of 0.5% from the revenues reported in the year-ago quarter.
Mission Systems to Boost the Overall Top Line
Northrop’s Mission Systems segment may reflect the positive impact of an increase in restricted sales in the Networked Information Solutions business area and higher volumes on the Ground/Air Task-Oriented Radar (G/ATOR) and Surface Electronic Warfare Improvement Program. These may have benefited the segment’s sales performance in the soon-to-be-reported quarter.
The Zacks Consensus Estimate for Mission System’s revenues in the third quarter is pegged at $2,616 million, indicating a rise of 7.4% from the revenues reported in the year-ago quarter.
Space Systems – a Key Contributor
Revenues from the Space System business unit are expected to have gained from higher sales from the Launch & Strategic Missiles and Space business areas. This must have boosted the segment’s revenues in the soon-to-be-reported quarter.
The Zacks Consensus Estimate for Space System’s revenues in the third quarter is pegged at $2,963 million, indicating an increase of 10.5% from the revenues reported in the year-ago quarter.
Third-Quarter Estimates
With the majority of NOC’s segments likely to report an improvement in sales, one can remain optimistic about the company’s top line in the soon-to-be-reported quarter. The Zacks Consensus Estimate for third-quarter sales is pegged at $9.15 billion, indicating an increase of 4.9% from the prior-year reported figure.
However, the strong top-line performance is likely to have been negatively impacted by supply-chain challenges, labor shortages and increasing inflation. These might have adversely impacted the company’s third-quarter bottom line.
The Zacks Consensus Estimate for third-quarter earnings is pegged at $6.11 per share, indicating a decrease of 7.8% from the prior-year reported figure.
Northrop Grumman Corporation Price and EPS Surprise
Northrop Grumman Corporation price-eps-surprise | Northrop Grumman Corporation Quote
What the Zacks Model Unveils
Our proven model does not conclusively predict 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 not the case here.
Northrop has an Earnings ESP of +1.08% but a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are two defense players you may want to consider as they have the right combination of elements to post an earnings beat this season:
Spirit Aerosystems SPR has an Earnings ESP of +47.19% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Spirit Aerosystems has a four-quarter average negative earnings surprise of 100.31%. The Zacks Consensus Estimate for SPR’s third-quarter loss of 39 cents indicates an improvement from the prior-year reported loss figure.
Transdigm Group TDG has an Earnings ESP of +1.51% and a Zacks Rank #3. Transdigm delivered a four-quarter average earnings surprise of 5.95%.
The Zacks Consensus Estimate for TDG’s third-quarter sales and earnings is pegged at $1.51 billion and $5.03 per share, respectively.
Upcoming Defense Release
General Dynamics Corporation GD is set to release third-quarter 2022 results on Oct 26. General Dynamics delivered an earnings surprise of 2.47% in the last four quarters, on average.
The Zacks Consensus Estimate for General Dynamics’ third-quarter revenues is pegged at $9.92 billion, suggesting growth of 3.7% from the year-ago quarter. The Zacks Consensus Estimate for third-quarter earnings is pegged at $3.16 per share, indicating growth of 2.9% from the prior-year reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
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