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Northrop Grumman (NOC) Q3 Earnings Surpass, 2018 View Up


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Northrop Grumman Corporation NOC delivered third-quarter 2018 earnings of $6.54 per share, beating the Zacks Consensus Estimate of $4.35 by 50.4%. The bottom line was also up 78.2% from $3.67 recorded in the year-ago quarter.

Total Revenues

In the third quarter, Northrop Grumman grossed total revenues of $8.09 billion, surpassing the Zacks Consensus Estimate of $8 billion by 1%. Moreover, the top line increased 23.1% from the year-ago figure of $6.57 billion. This revenue upside was primarily driven by the acquisition of Innovation Systems coupled with higher sales at Aerospace Systems and Mission Systems.

Northrop Grumman Corporation Price, Consensus and EPS Surprise

Northrop Grumman Corporation Price, Consensus and EPS Surprise | Northrop Grumman Corporation Quote

Segmental Details

Aerospace Systems: Segmental sales of $3.28 billion increased 5% year over year, driven by higher volumes of manned aircraft programs. Strong autonomous systems also benefited this segment's top line.

Operating income also rose 9.3% to $376 million while operating margin was 50 basis points (bps) higher than the previous year's tally.

Innovation Systems: This segment reported sales of $1.42 billion. Operating income came in at $161 million while operating margin stood at 11.4%.

Mission Systems: Sales from this segment rose 2.6% to $2.91 billion owing to expanded sales volume of Sensors and Processing systems.

Operating income also grew 11.1% to $399 million while operating margin expanded 100 bps to 13.7%.

Technology Services: Sales at this segment dropped 12.1% to $1.04 billion, primarily due to the completion of several programs including JRDC, Virginia Information Technologies Agency (VITA) and KC-10.

Operating income decreased 10.5% to $111 million while operating margin expanded 20 bps to 10.7%.

Operational Update

Total operating cost and expenses at the end of the quarter were $6.91 billion, up 20.5%.

Operating income during the quarter surged 40.1% to $1.18 billion.

Financial Condition

Northrop Grumman's cash and cash equivalents as of Sep 30, 2018 were $1.23 billion, down from $11.22 billion as of Dec 31, 2017.

Long-term debt (net of current portion) as of Sep 30, 2018 was $13.89 billion, down from $14.39 billion as of 2017 end.

Net cash inflow from operating activities in the first nine months of 2018 was $1.45 billion compared with the year-ago figure of $1.01 billion.

2018 Guidance

Northrop Grumman currently expects to generate revenues of $30 billion during 2018, in line with its earlier projection.

On the bottom-line front, the company has raised its outlook. Northrop Grumman now hopes to log earnings in the band of $18.75-$19 per share compared with the earlier guidance view of $16.60-$16.85. Also, the company has changed its free cash flow forecast to the range of $2.5-$2.7 billion from the past prediction of $2.4-$2.6 billion.

Zacks Rank

Northrop Grumman currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Upcoming Defense Releases

Raytheon Company RTN is expected to report third-quarter 2018 results on Oct 25. The Zacks Consensus Estimate for the quarterly earnings is pegged at $1.94 per share.

Transdigm Group Incorporated TDG is expected to report fourth-quarter fiscal 2018 results on Nov 8. The Zacks Consensus Estimate for the quarterly earnings stands at $4.27 per share.

FLIR System, Inc. FLIR is expected to report third-quarter 2018 results on Oct 30. The Zacks Consensus Estimate for the quarterly earnings is predicted at 57 cents per share.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: NOC , TDG , RTN , FLIR



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