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Northrop Grumman (NOC) Beats on Q3 Earnings, Ups '20 View
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Northrop Grumman Corporation (NOC - Free Report) reported third-quarter 2020 earnings of $5.89 per share, which surpassed the Zacks Consensus Estimate of $5.60 by 5.2%. Moreover, the bottom line improved 7% from $5.49 reported in the year-ago quarter.
Total Sales
In third-quarter 2020, Northrop Grumman reported total sales of $9,083 million, which surpassed the Zacks Consensus Estimate of $8,838 million by 2.77%. Moreover, sales grew 7% from the year-ago quarter’s $8,475 million. The upside was driven by growth in majority of its business segments.
Backlog
Northrop Grumman’s total backlog at the end of third-quarter 2020 was $81.3 billion. Funded backlog during the quarter amounted to $33.3 billion, whereas unfunded backlog amounted to $48 billion.
Segmental Details
Effective Jan 1, 2020, Northrop made some structural changes in its reportable segments.
Aeronautics Systems: Segment sales of $2,914 million grew 7% year over year as a result of higher sales from both autonomous systems and manned aircraft.
Operating income improved 9% to $294 million, whereas operating margin expanded 40 basis points (bps) to 10.1%.
Mission Systems: Segment sales increased 10% to $2,551 million, driven by higher sales volumes from airborne sensors and network sales; increased navigation, targeting & survivability sales and elevated maritime/land systems & sensors sales.
Operating income rose 5% to $370 million, while operating margin contracted 70 bps to 14.5%.
Defense Systems: Sales in this segment declined 4% to $1,859 million due to lower volumes in mission readiness and battle management & missile system programs.
Operating income increased 8% to $217 million, while operating margin expanded 130 bps to 11.7%.
Space Systems: Space Systems’ third-quarter 2020 sales increased 17% to $2,198 million owing to higher sales from both Space and Launch & Strategic Missiles programs.
The segment’s operating income improved 17% to $224 million, with operating margin expanding 10 bps to 10.2%.
Operational Update
Total operating costs and expenses at the end of the quarter were $8,098 million, up 7.6% from the year-ago quarter’s $7,524 million.
Operating income during the quarter improved 3.6% year over year to $985 million.
Northrop Grumman Corporation Price, Consensus and EPS Surprise
Northrop Grumman’s cash and cash equivalents as of Sep 30, 2020, were $4,995 million, up from $2,245 million as of Dec 31, 2019.
Long-term debt (net of current portion) as of Sep 30, 2020, was $14,260 million, up from $12,770 million as of Dec 31, 2019.
Net cash inflow from operating activities as of Sep 30, 2020, was $2,703 million compared with $1,833 million as of Sep 30, 2019.
2020 Guidance
Northrop Grumman raised its 2020 financial guidance and expects to generate revenues of $35.7-$36 billion. The Zacks Consensus Estimate for the company’s full-year sales, pegged at $35.5 billion, lies below its projected view.
It expects free cash flow of $3.3-$3.6 billion for 2020.
Northrop Grumman has also raised its full-year earnings expectations from $22.00-$22.40 to $22.25-$22.65 per share. The Zacks Consensus Estimate for the company’s 2020 earnings, pegged at $22.46 per share, lies above the midpoint of the company’s guidance range.
Lockheed Martin (LMT - Free Report) reported third-quarter 2020 earnings from continuing operations of $6.25 per share, which surpassed the Zacks Consensus Estimate of $6.07 by 3%.
Hexcel Corporation (HXL - Free Report) reported third-quarter 2020 loss of 29 cents per share against the Zacks Consensus Estimate of earnings of 7 cents. The bottom line also declined from the prior-year quarter’s earnings per share of 90 cents.
Teledyne Technologies (TDY - Free Report) reported third-quarter 2020 adjusted earnings of $2.48 per share, which surpassed the Zacks Consensus Estimate of $2.40 by 3.3%.
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Northrop Grumman (NOC) Beats on Q3 Earnings, Ups '20 View
Northrop Grumman Corporation (NOC - Free Report) reported third-quarter 2020 earnings of $5.89 per share, which surpassed the Zacks Consensus Estimate of $5.60 by 5.2%. Moreover, the bottom line improved 7% from $5.49 reported in the year-ago quarter.
Total Sales
In third-quarter 2020, Northrop Grumman reported total sales of $9,083 million, which surpassed the Zacks Consensus Estimate of $8,838 million by 2.77%. Moreover, sales grew 7% from the year-ago quarter’s $8,475 million. The upside was driven by growth in majority of its business segments.
Backlog
Northrop Grumman’s total backlog at the end of third-quarter 2020 was $81.3 billion. Funded backlog during the quarter amounted to $33.3 billion, whereas unfunded backlog amounted to $48 billion.
Segmental Details
Effective Jan 1, 2020, Northrop made some structural changes in its reportable segments.
Aeronautics Systems: Segment sales of $2,914 million grew 7% year over year as a result of higher sales from both autonomous systems and manned aircraft.
Operating income improved 9% to $294 million, whereas operating margin expanded 40 basis points (bps) to 10.1%.
Mission Systems: Segment sales increased 10% to $2,551 million, driven by higher sales volumes from airborne sensors and network sales; increased navigation, targeting & survivability sales and elevated maritime/land systems & sensors sales.
Operating income rose 5% to $370 million, while operating margin contracted 70 bps to 14.5%.
Defense Systems: Sales in this segment declined 4% to $1,859 million due to lower volumes in mission readiness and battle management & missile system programs.
Operating income increased 8% to $217 million, while operating margin expanded 130 bps to 11.7%.
Space Systems: Space Systems’ third-quarter 2020 sales increased 17% to $2,198 million owing to higher sales from both Space and Launch & Strategic Missiles programs.
The segment’s operating income improved 17% to $224 million, with operating margin expanding 10 bps to 10.2%.
Operational Update
Total operating costs and expenses at the end of the quarter were $8,098 million, up 7.6% from the year-ago quarter’s $7,524 million.
Operating income during the quarter improved 3.6% year over year to $985 million.
Northrop Grumman Corporation Price, Consensus and EPS Surprise
Northrop Grumman Corporation price-consensus-eps-surprise-chart | Northrop Grumman Corporation Quote
Financial Condition
Northrop Grumman’s cash and cash equivalents as of Sep 30, 2020, were $4,995 million, up from $2,245 million as of Dec 31, 2019.
Long-term debt (net of current portion) as of Sep 30, 2020, was $14,260 million, up from $12,770 million as of Dec 31, 2019.
Net cash inflow from operating activities as of Sep 30, 2020, was $2,703 million compared with $1,833 million as of Sep 30, 2019.
2020 Guidance
Northrop Grumman raised its 2020 financial guidance and expects to generate revenues of $35.7-$36 billion. The Zacks Consensus Estimate for the company’s full-year sales, pegged at $35.5 billion, lies below its projected view.
It expects free cash flow of $3.3-$3.6 billion for 2020.
Northrop Grumman has also raised its full-year earnings expectations from $22.00-$22.40 to $22.25-$22.65 per share. The Zacks Consensus Estimate for the company’s 2020 earnings, pegged at $22.46 per share, lies above the midpoint of the company’s guidance range.
Zacks Rank
Northrop Grumman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Defense Releases
Lockheed Martin (LMT - Free Report) reported third-quarter 2020 earnings from continuing operations of $6.25 per share, which surpassed the Zacks Consensus Estimate of $6.07 by 3%.
Hexcel Corporation (HXL - Free Report) reported third-quarter 2020 loss of 29 cents per share against the Zacks Consensus Estimate of earnings of 7 cents. The bottom line also declined from the prior-year quarter’s earnings per share of 90 cents.
Teledyne Technologies (TDY - Free Report) reported third-quarter 2020 adjusted earnings of $2.48 per share, which surpassed the Zacks Consensus Estimate of $2.40 by 3.3%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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