Northrop Hits 52-Week High On Expansion Through Acquisition

Shares of Northrop Grumman (NYSE:NOC) scaled a 52-week high of $281.57 on Sep 20, eventually closing at $280.04. The company returned 31.3% in the past one-year period. The average volume of shares traded over the last three months was roughly 653.7 thousand.

What is Driving Northrop Grumman?

Northrop has been proactive in looking out for newer opportunities and is working progressively toward attaining its guidance. Toward this, it recently finalized the acquisition agreement of Orbital ATK in a major defense deal worth $9.2 billion. (Read more: Northrop Grumman Announces Orbital ATK Buyout for $9.2B). Since the announcement of the deal the company has gained 4.8%.

Northrop’s intention of setting Orbital ATK as an additional business unit is expected to be accretive in terms earnings per share and free cash flow going forward. Additionally, Orbital ATK’s expertise in satellites, spacecraft components and commercial space launch systems is anticipated to expand Northrop’s product portfolio. As such, the combined company will be able to hold a larger portion of the U.S. Defense order through a diverse product portfolio.

Northrop currently remains on track to make capital investments worth $900 million going ahead during the rest of 2017, up 28.6% from the 2016-end figure. These investments are expected to boost the company’s growth trajectory. The company is well poised to gain from Senate’s approval of higher defense spending in fiscal 2018.

The company witnessed a solid earnings growth of 11% in the second quarter. Buoyed by its better-than-expected second-quarter outcome, it also raised 2017 earnings guidance range, reflecting upside in operational performance in the days ahead.

Zacks Rank & Key Stocks

Northrop currently carries a Zacks Rank #2 (Buy). Investors can consider another top-ranked stock from the broader sector such as Engility Holdings, Inc. (NYSE:EGL) , CAE Inc (TO:CAE) and Teledyne Technologies Incorporated (NYSE:TDY) all of which sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Engility delivered an average earnings surprise of 23.5% in the trailing four quarters. Its 2017 estimates have risen by 5.7% to $2.23 in the last 90 days.

CAE delivered an average earnings surprise of 4.2% in the trailing four quarters. Its 2017 estimates have risen by 6.2% to 86 cents in the last 90 days.

Teledyne delivered an average earnings surprise of 36.1% in the trailing four quarters. Its 2017 estimates have risen by 8.6% to $5.70 in the last 90 days.

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