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Here's Why You Should Add Northrop Grumman Stock to Your Portfolio Now

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Northrop Grumman Corporation (NOC - Free Report) , with its strong backlog, rising earnings and sales estimates, robust ROE and efficient debt management, offers a great investment opportunity in the Zacks Aerospace sector.

The company currently carries a Zacks Rank #2 (Buy). Let’s look at the factors that are driving the stock.

NOC’s Growth Projections & Surprise History

The Zacks Consensus Estimate for NOC’s 2024 earnings per share (EPS) is pinned at $25.14, which indicates year-over-year growth of 7.9%.

The consensus estimate for 2024 sales is pinned at $41.40 billion, which indicates year-over-year growth of 5.4%.

The company’s long-term (three to five years) earnings growth rate is 8.7%.

NOC has a positive earnings surprise history. Its trailing four-quarter earnings surprise is 7.68%, on average.

NOC’s Dividend Yield and Share Repurchases

NOC has been rewarding its shareholders with dividend payments at regular intervals. Its current dividend yield is 1.55%, better than the sector’s yield of 1.16%.

As of June 30, 2024, Northrop Grumman made share repurchases worth $0.6 billion under the 2023 Repurchase Program. A total of $1.9 billion share repurchase authorization remained outstanding.

NOC’s Return on Equity

NOC’s current return on equity (ROE) is 25.44%, which is more than the industry average of 11.55%. ROE, a profitable measure, reflects how effectively a company is utilizing its shareholders’ funds in its operations to generate income.

Debt Position of NOC

NOC’s total debt to capital is currently 50.7% compared with its industry average of 55.45%.
 
The time-to-interest earned ratio at the end of the second quarter was 5.64. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

NOC’s Liquidity

NOC’s current ratio is 1.11, better than the industry average of 1.10. The current ratio, being greater than one, indicates the company has enough short-term assets to meet its short-term obligations.

NOC’s Rising Backlog

Northrop Grumman’s total backlog was a solid $83.10 billion as of June 30, 2024. Such a consistent level of contract flows and subsequent backlog growth bolster its long-term revenue prospects. The company expects to recognize approximately 40% and 65% of its backlog over the next 12 months and 24 months, respectively.

NOC Stock’s Price Performance

Shares of NOC have gained 25.5% in the past three months compared with the industry’s 9.1% growth.

Zacks Investment Research
Image Source: Zacks Investment Research

Other Stocks to Consider

Other top-ranked stocks in the industry are Air Industries Group (AIRI - Free Report) , Archer Aviation (ACHR - Free Report) and Redwire Corporation (RDW - Free Report) . AIRI and ACHR sport a Zacks Rank #1 (Strong Buy) while RDW currently carries a Zacks Rank of 2. You can see the complete list of Zacks Rank of 1 stocks here.

The Zacks Consensus Estimate for AIRI’s 2024 sales indicates year-over-year growth of 7.1%. The consensus estimate for 2024 EPS indicates year-over-year growth of 92.3%.

The Zacks Consensus Estimate for ACHR’s 2025 sales indicates year-over-year growth of 1,611.3%. The company has a four-quarter average earnings surprise of 7.73%.

The Zacks Consensus Estimate for RDW’s 2024 sales indicates year-over-year growth of 27.3%. The consensus estimate for 2025 loss indicates a year-over-year improvement from the 2024 estimated loss figure.

 

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