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Tickers in this Article: NOC
Shares of Northrop Grumman (NYSE:NOC) have risen 11.6% since July 23, 2012 to close at $71.13 on October 18, 2012. The company is looking to keep that trend going when it releases its third quarter results on Wednesday, October 24, 2012.

Investors care about earnings because they drive stock prices. Strong earnings generally result in the stock price moving up and vice versa. SEE: Everything Investors Need To Know About Earnings

What to Expect: The consensus estimate for Northrop Grumman's earnings is $1.70 per share, up 4.3% from a year ago when the company reported earnings of $1.63 per share.

In the last 90 days, this has risen from $1.67. Analysts are expecting earnings of $7.24 per share for the fiscal year.

Revenue for the quarter is expected to be $6.34 billion, short of last year's reported figure of $6.61 billion by 4.1%. Northrop Grumman is expected to report revenue of $25.19 billion for the fiscal year.

Company Performance: Northrop Grumman has experienced four consecutive quarters of revenue decline. It decreased 4.4% to $6.27 billion in the second quarter. Prior to that, the figure fell 8% in the first quarter, 24.4% in the fourth quarter of the last fiscal year and 24.1% in the third quarter of the last fiscal year.

The P/E ratio for NOC is 9.2, below the industry average of 12.76. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: Investment Valuation Ratios: Price/Earnings Ratio

The price is within 12 cents of its 52-week high ($71.25), which was set on October 18, 2012. Northrop Grumman's stock price is currently in the middle of a rising streak. The stock has risen $2.92 per share since October 10, 2012.

The Competition: Northrop Grumman offers its global customers innovative products, services, and solutions in information and services, aerospace, electronics, and shipbuilding. The company's closest competitor in the aerospace and defense industry, Boeing (BA), will report earnings on October 24, 2012. Analysts are expecting earnings of $1.12 per share for Boeing, down 23.3% from last year's earnings of $1.46 per share. Analysts are less optimistic about Northrop Grumman than about Boeing. Nineteen out of 22 analysts rate the latter a buy compared to two of 16 for the former.

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