Northrop Grumman Corporation NOC reported first-quarter 2023 earnings of $5.50 per share, which beat the Zacks Consensus Estimate of $5.16 by 6.6%. The bottom line, however, decreased 10% from $6.10 per share recorded in the year-ago quarter.
NOC’s total sales of $9.30 billion beat the Zacks Consensus Estimate of $9.20 billion by 1.1%. The top line also increased 6% from $8.80 billion in the year-ago quarter.
This sales improvement can be attributed to strong demand.
Northrop Grumman Corporation Price, Consensus and EPS Surprise
Northrop Grumman Corporation price-consensus-eps-surprise-chart | Northrop Grumman Corporation Quote
The company’s total backlog stood at $77.50 billion at the end of first-quarter 2023 compared with $78.70 billion at the end of fourth-quarter 2022.
Aeronautics Systems: This segment’s sales of $2,515 million declined 7% year over year, due to lower volumes in Manned Aircraft, Autonomous Systems as well as Joint Surveillance and Target Attack Radar System (JSTARS) program.
The unit’s operating income went down 23% to $237 million, whereas the operating margin contracted 200 basis points (bps) to 9.4%.
Mission Systems: Sales at this segment increased 3% to $2,563 million. This was due to higher restricted sales in the Networked Information Solutions business area as well as higher volume on SEWIP, marine systems programs and infrared countermeasure programs.
The unit’s operating income decreased 6% to $360 million, while the operating margin contracted 140 bps to 14%.
Defense Systems: This segment’s sales increased 7% to $1,376 million. This was driven by higher volume on the Integrated Air and Missile Defense Battle Command System program, ramp-up on the 120mm Tank Training ammunition program as well as higher volume on an international training program.
The unit’s operating income increased 3% to $160 million, while the operating margin contracted 50 bps to 11.6%.
Space Systems: Sales at this segment rose 17% to $3,350 million, driven by higher sales from both the Launch & Strategic Missiles as well as Space business areas.
The segment’s operating income improved 20% to $313 million, while the operating margin expanded 20 bps to 9.3%.
The company’s operating income during the quarter improved 5.6% to $947 million, driven by lower unallocated corporate expense and a reduction in the FAS/CAS operating adjustment
Northrop Grumman’s cash and cash equivalents as of Mar 31, 2023 were $2,495 million, down from $2,577 million as of Dec 31, 2022.
Long-term debt (net of the current portion) was $13,770 million compared with $11,805 million as of Dec 31, 2022.
Northrop’s net cash outflow from operating activities as of Mar 31, 2023 was $702 million compared with the year-ago quarter’s figure of $488 million.
Northrop Grumman reiterated most of its financial guidance for 2023.
The company still expects revenues in the range of $38.00-$38.40 billion for 2023. The Zacks Consensus Estimate for the same stands at $38.28 billion, which is above the mid-point of the company’s guided range.
Adjusted earnings are now projected in the range of $22.25-$22.85 per share, up from the prior guided range of $21.85-$22.45 per share. The Zacks Consensus Estimate for the same stands at $22.04 per share, which lies lower than the company’s guided range.
NOC continues to expect adjusted free cash flow in the range of $1.85-$2.15 billion.
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.
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