Yahoo Finance Will Segmental Performance Aid Northrop's (NOC) Q1 Earnings?
Northrop Grumman Corporation NOC is scheduled to report its first-quarter 2023 results on Apr 27 before market open.
Northrop has a four-quarter earnings surprise of 3.35%, on average. The strong revenue performance across most of its segments is likely to contribute to the company’s overall results in the soon-to-be-reported quarter. However, higher labor and material costs due to inflation may have weighed on the bottom line.
Unfavorable Aeronautics Systems Sales
Lower volumes in the Autonomous Systems, Joint Surveillance and Target Attack Radar System program might have hurt the first-quarter revenue performance of the Aeronautics Systems segment.
The Zacks Consensus Estimate for Aeronautics Systems’ first-quarter revenues is pegged at $2,626.9 million, indicating a decline of 2.8% from the year-ago quarter’s reported revenues.
Defense Systems Revenues to Remain Flat
Higher volumes on the Special Ammunition and Weapon Systems program and the Integrated Battle Command System are likely to have been offset by the lower scope of an international training program, the completion of a Joint Services support program and the wind-down of the UKAWACS and JSTARS programs.
The Zacks Consensus Estimate for Defense Systems’ first-quarter revenues is pegged at $1,283 million, almost flat with the year-ago quarter’s reported revenues.
Mission Systems to Boost the Top Line
Northrop’s Mission Systems segment is expected to reflect the positive impact of the timing of material receipts and improved labor availability. Higher sales in the Networked Information Solutions business area, coupled with higher volumes on airborne radar programs and increased volumes on the Surface Electronic Warfare Improvement Program, must have boosted the segment’s sales in the soon-to-be-reported quarter.
The Zacks Consensus Estimate for Mission System’s first-quarter revenues is pegged at $2,617.4 million, indicating a rise of 4.8% from the year-ago quarter’s reported revenues.
Space Systems – Another Key Contributor
Revenues from the Space System business unit are expected to have gained from higher sales in the Launch & Strategic Missiles and Space business areas, driven by a ramp-up in development programs. This must have aided the segment’s revenues in the first quarter.
The Zacks Consensus Estimate for Space System’s first-quarter revenues is pegged at $3,317.7 million, suggesting an increase of 16.2% from the year-ago quarter’s reported revenues.
Northrop Grumman Corporation Price and EPS Surprise
Northrop Grumman Corporation price-eps-surprise | Northrop Grumman Corporation Quote
First-Quarter Estimates
With the majority of NOC’s segments likely to report an improvement in sales, one can be optimistic about the company’s top line in the soon-to-be-reported quarter. Also, the strong backlog of Northrop witnessed in prior quarters, favored by the rising global defense budget, may have added impetus to its first-quarter revenues. The Zacks Consensus Estimate for its first-quarter sales is pegged at $9.20 billion, indicating an increase of 4.6% from the prior-year reported figure.
A favorable top line is likely to have aided the first-quarter bottom line. However, ongoing inflationary pressure on labor and material costs, along with supply-chain disruptions, may have dented the overall earnings of the company in the first quarter.
The Zacks Consensus Estimate for its first-quarter earnings is pegged at $5.20 per share, implying a decrease of 14.8% from the prior-year reported figure.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Northrop this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here.
Northrop has an Earnings ESP of -1.43% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are three defense players you may want to consider as these have the right combination of elements to post an earnings beat this season:
Spirit Aerosystems SPR has an Earnings ESP of +16.58% and a Zacks Rank #3. Spirit Aerosystems delivered a four-quarter average negative earnings surprise of 157.65%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for SPR’s first-quarter sales is pegged at $1.48 billion, indicating an improvement of 25.8% from the prior-year reported figure.
Embraer S.A. ERJ has an Earnings ESP of +116.67% and a Zacks Rank #3.
Embraer has a four-quarter average earnings surprise of 105.32%. The Zacks Consensus Estimate for ERJ’s first-quarter sales calls for an improvement of 16.7% from the prior-year reported figure.
Raytheon Technologies RTX has an Earnings ESP of +0.18% and a Zacks Rank #3. The long-term earnings growth rate of RTX is 8.3%.
The Zacks Consensus Estimate for Raytheon’s first-quarter earnings, pegged at $1.11 per share, indicates a decline of 3.5% from the prior-year reported figure. The Zacks Consensus Estimate for RTX’s sales suggests a growth rate of 7.3% from the prior-year reported figure.
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Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
Embraer-Empresa Brasileira de Aeronautica (ERJ) : Free Stock Analysis Report
Spirit Aerosystems Holdings, Inc. (SPR) : Free Stock Analysis Report
Raytheon Technologies Corporation (RTX) : Free Stock Analysis Report
