Northrop Grumman Corp.
) to beat expectations when it reports second quarter 2013
results on Jul 24.
Why a Likely Positive Surprise?
Our proven model shows that Northrop Grumman is likely to beat
earnings because it has the right combination of two key
Positive Zacks ESP: Expected Surprise Prediction or ESP(Read:
Zacks Earnings ESP: A Better Method
), which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is at +0.59%. This is
a meaningful and leading indicator of a likely positive earnings
surprise for the shares.
Zacks #3 Rank (Hold): Note that stocks with Zacks Ranks of #1, 2
and 3 have a significantly higher chance of beating earnings. The
Sell rated stocks (#4 and 5) should never be considered going
into an earnings announcement.
The combination of Northrop Grumman's Zacks Rank #3 (Hold) and
0.59% ESP makes us confident of a positive earnings beat on Jul
What is Driving the Better Than Expected
Northrop has a strong presence in Air Force, Space & Cyber
Security programs. The company's product line is well positioned
in high priority categories, such as defense electronics,
unmanned aircraft and missile defense.
Northrop Grumman is taking several initiatives to ensure further
alignment with its customers' need in order to increase
affordability and cost competitiveness. The company is working on
establishing Aerospace Design Centers of Excellence at its
various centers. These actions eye on leveraging capabilities in
key areas of manned aircraft and unmanned systems. In order to
improve its cost competitiveness, the company is closing and
consolidating numerous facilities across the company.
Going forward, growth in domestic efforts will be driven by the
Navy's Triton program with international growth supported by
North Atlantic Treaty Organization's Alliance Ground Surveillance
and continuing efforts on Germany's EURO HAWK program. The
company seems to be well positioned with a number of contracts
secured this quarter.
Other Stocks to Consider
Northrop Grumman is not the only firm looking up this earnings
season. We also see likely earnings beats coming from these three
The Boeing Company
), with Earnings ESP of +1.27% and a Zacks Rank #2 (Buy).
BOEING CO (BA): Free Stock Analysis Report
EMBRAER AIR-ADR (ERJ): Free Stock Analysis
GENL DYNAMICS (GD): Free Stock Analysis
NORTHROP GRUMMN (NOC): Free Stock Analysis
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), with Earnings ESP of +6.35% and a Zacks Rank #3 (Hold).
General Dynamics Corp.
), with Earnings ESP of +0.61% and a Zacks Rank #3 (Hold).