Post Earnings Coverage as Northrop Grumman’s Earnings Surged 20%

Upcoming AWS Coverage on Textron Post-Earnings Results

LONDON, UK / ACCESSWIRE / May 2, 2017 / Active Wall St. announces its post-earnings coverage on Northrop Grumman Corp. (NYSE: NOC). The Company announced its first quarter fiscal 2017 results on April 26, 2017. The defense contractor surpassed top- and bottom-line expectations and also raised its earnings guidance for fiscal 2017. Register with us now for your free membership at:

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One of Northrop Grumman’s competitors within the Aerospace/Defense – Major Diversified space, Textron Inc. (NYSE: TXT), reported its Q1 2017 results and provided updates on its 2017 financial outlook for arctic cat acquisition on April 19, 2017. AWS will be initiating a research report on Textron in the coming days.

Today, AWS is promoting its earnings coverage on NOC; touching on TXT. Get our free coverage by signing up to:

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Earnings Reviewed

For the three months ended March 31, 2017, Northrop Grumman’s sales increased 5% to $6.27 billion compared to sales of $5.96 billion in Q1 2016, largely driven by a 13% sales increase at Aerospace Systems. The Company’s revenue numbers surpassed analysts’ consensus of $6.12 billion.

During Q1 2017, Northrop Grumman’s operating income increased 13%, while operating margin rate increased 90 basis points to 13.3%, which includes higher segment operating income and higher net FAS/CAS pension adjustment than in the prior year’s comparable period. The Company’s reported quarter segment’s operating income increased 4% to $726 million, primarily due to higher Aerospace Systems sales volume, while the segment’s operating margin rate decreased 20 basis points to 11.6% largely due to contract mix at Aerospace Systems and the timing of risk reductions at Mission Systems

For Q1 2017, Northrop Grumman’s net earnings increased 15% to $640 million compared to $556 million in the prior year’s same period. The Company’s diluted earnings per share increased 20% to $3.63 from $3.03 in the year earlier corresponding quarter. Northrop Grumman’s earnings smashed passed Wall Street’s estimates of $2.90 per share.

Segment Results

For Q1 2017, Northrop Grumman’s Aerospace Systems sales increased 13% to $2.90 billion, primarily due to higher volume for Manned Aircraft programs, including restricted work and increased F-35 deliveries. The segment’s Autonomous Systems sales increased slightly and reflect higher Triton volume and lower NATO Alliance Ground Surveillance volume.

Aerospace Systems’ Q1 2017 operating income increased 9% on a y-o-y basis to $312 million, due to higher sales. Operating margin rate decreased to 10.8% principally due to changes in contract mix on Manned Aircraft programs and the timing of risk reductions on Space programs, partially offset by improved performance on Autonomous Systems programs.

During Q1 2017, Northrop Grumman’s Mission Systems segment generated sales of $2.74 billion, up 2% on a y-o-y basis, primarily due to higher Sensors and Processing volume, partially offset by lower Advanced Capabilities volume. The segment’s Cyber and ISR sales were comparable to the prior year’s same period.

For the reported quarter, Mission Systems operating income was unchanged at $353 million, while operating margin rate fell to 12.9%, primarily due to the timing of risk reductions on Advanced Capabilities programs, partially offset by improved performance on Cyber and ISR programs.

Northrop Grumman’s Technology Services Q1 2017 sales decreased 1.6% to $1.19 billion. The decline was attributed to lower sales for System Modernization and Services programs and Advanced Defense Services programs. System Modernization and Services and Advanced Defense Services sales decreased principally due to the completion of several programs in 2016. Global Logistics and Modernization sales were comparable to the prior year’s same period and included higher international revenue, partially offset by lower volume on the KC-10 program.

For Q1 2017, Technology Services’ operating income increased 4% to $131 million, while operating margin rate grew 60 basis points to 11.0% principally due to improved performance on System Modernization and Services and Global Logistics and Modernization programs.

Cash Balance

For Q1 2017, Northrop Grumman’s cash used in operating activities totaled $439 million compared to $60 million used in Q1 2016. The Company’s reported quarter free cash flow was $655 million after capital expenditures of $216 million. As of March 31, 2017, Northrop Grumman’s cash and cash equivalents totaled $2.54 billion.

Outlook

For FY17, Northrop Grumman reiterated revenues forecasts of $25 billion. The Company now expects to generate earnings in the range of $11.80–$12.10 per share compared to prior expectations for earnings per share of $11.30–$11.60.

Stock Performance

At the closing bell, on Monday, May 01, 2017, Northrop Grumman’s stock slightly fell 0.66%, ending the trading session at $244.34. A total volume of 778.94 thousand shares were traded at the end of the day. In the last six months and previous twelve months, shares of the Company have surged 9.22% and 20.34%, respectively. Moreover, the stock gained 5.44% since the start of the year. The Company’s shares are trading at a PE ratio of 19.10 and have a dividend yield of 1.47%. At Monday’s closing price, the stock’s net capitalization stands at $43.08 billion.

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