Northrop Grumman (NOC) Q4 Earnings Beat, Revenues Up Y/Y

Northrop Grumman Corporation (NYSE:NOC) reported fourth-quarter 2019 earnings of $5.61 per share, beating the Zacks Consensus Estimate of $4.78 by 17.4%. Reported earnings also improved 13.8% from $4.93 in the year-ago quarter.

For 2019, earnings were $21.21 per share, down 0.56% from the year-ago quarter. However, 2019 earnings exceeded the Zacks Consensus Estimate of $20.39 by 4%.

Total Revenues

In fourth-quarter 2019, Northrop Grumman reported total revenues of $8,721 million, missing the Zacks Consensus Estimate of $8,828 million by 1.2%. However, revenues increased 6.9% from the year-ago quarter’s $8,156 million. The year-over-year upside was primarily driven by a 10% increase in Aerospace systems sales, 9% in Innovation Systems sales and 6% in Mission Systems sales.

In 2019, total revenues increased 12.4% year over year to $33,841 million. Full-year revenues, however, missed the Zacks Consensus Estimate of $33,960 million by a mere 0.35%.

Segmental Details

Aerospace Systems: Segment sales of $3,518 million grew 10% year over year as a result of higher volumes of manned aircraft, autonomous systems and space programs.

Operating income rose 9% to $367 million, whereas operating margin contracted 10 basis points (bps) to 10.5%.

Mission Systems: Segment sales increased 6% to $3,220 million owing to higher sales volume of Advanced Capabilities, Cyber, ISR, and Sensors and Processing systems.

Operating income rose 13% to $450 million, with the operating margin expanding 90 bps to 14%.

Technology Services: Sales at this segment dropped 4% to $1,022 million, primarily due to lower Global Logistics and Modernization sales.

Operating income declined 8% to $106 million, with the operating margin contracting 40 bps to 10.4%.

Innovation Systems: Innovation Systems’ fourth-quarter 2019 proforma sales increased 9% to $1,599 million from $1,461 million proforma sales in the fourth quarter of 2018. The increase was owing to higher volumes for Space Systems, Flight Systems and Defense Systems.

The segments’ operating income totaled $171 million and the operating margin expanded 90 bps to 10.7%.

Northrop Grumman Corporation Price, Consensus and EPS Surprise

Operational Update

Total operating costs and expenses at the end of the quarter were $29,872 million, up 13.6%.

Operating income during the quarter increased 5% to $3,969 million.

Financial Condition

Northrop Grumman’s cash and cash equivalents, as of Dec 31, 2019, were $2,245 million, up from $1,579 million, as of Dec 31, 2018.

Long-term debt (net of current portion), as of Dec 31, 2019, was $12,770 million, down from $13,883 million, as of 2018-end.

Net cash inflow from operating activities, as of Dec 31, 2019, was $4,297 million compared with $3,827 million, as of Dec 31, 2018.

2020 Guidance

Northrop Grumman currently expects to generate revenues of $35.3-$35.8 billion during 2020. The company expects free cash flow of $3.15-$3.45 billion in 2019. The 2020 earnings are expected to be $22.75-$23.15 per share.

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

Teledyne Technologies Inc. (NYSE:TDY) reported fourth-quarter 2019 adjusted earnings of $2.90 per share, which surpassed the Zacks Consensus Estimate of $2.76 by 5.1%. The bottom-line figure also came above the guided range of $2.71-$2.76.

Lockheed Martin Corp. (NYSE:LMT) reported fourth-quarter 2019 earnings of $5.29 per share, which surpassed the Zacks Consensus Estimate of $4.99 by 6%. The bottom line also improved 20.5% from $4.39 in the year-ago quarter.

Textron Inc. (NYSE:TXT) reported fourth-quarter 2019 adjusted earnings of $1.11 per share, which surpassed the Zacks Consensus Estimate of $1.08 by 2.8%. The bottom line, however, declined 3.5% from $1.15 in the year- ago quarter.

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.

See these 7 breakthrough stocks now>>