Northrop Grumman Fourth Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Northrop Grumman (NYSE:NOC) will unveil its latest earnings tomorrow, Wednesday, January 30, 2013. Northrop Grumman offers its global customers innovative products, services, and solutions in information and services, aerospace, electronics, and shipbuilding.

Northrop Grumman Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for net income of $1.74 per share, a decline of 5.9% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved up from $1.73. Between one and three months ago, the average estimate moved up. It has been unchanged at $1.74 during the last month. Analysts are projecting profit to rise by 14.2% compared to last year’s $7.41.

Past Earnings Performance: The company has beaten estimates the last four quarters and is coming off a quarter where it topped forecasts by 3 cents, reporting profit of $1.73 per share against a mean estimate of net income of $1.70 per share.

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A Look Back: In the third quarter, profit fell 11.7% to $459 million ($1.82 a share) from $520 million ($1.86 a share) the year earlier, but exceeded analyst expectations. Revenue fell 5.2% to $6.27 billion from $6.61 billion.

Here’s how Northrop Grumman traded following its last earnings report 3 months ago and leading up to its upcoming earnings report this week:

noc

Stock Price Performance: Between November 26, 2012 and January 24, 2013, the stock price had risen $3.24 (5%), from $64.99 to $68.23. The stock price saw one of its best stretches over the last year between October 10, 2012 and October 18, 2012, when shares rose for seven straight days, increasing 4.3% (+$2.92) over that span. It saw one of its worst periods between October 18, 2012 and October 26, 2012 when shares fell for seven straight days, dropping 4.4% (-$3.11) over that span.

Wall St. Revenue Expectations: Analysts are projecting a decline of 2.8% in revenue from the year-earlier quarter to $6.33 billion.

Key Stats:

On the top line, the company is hoping to use this earnings announcement to snap a string of four-straight quarters of revenue decreases. Revenue fell 24.4% in the fourth quarter of the last fiscal year, 8% in first quarter and 4.4% in the second quarter and then fell again in the third quarter.

An income boost this time around would be welcome news after profit drops in the past three quarters. Net income fell 4.5% in the first quarter, by 7.7% in the second quarter and again in the third quarter.

Analyst Ratings: There are mostly holds on the stock with 11 of 16 analysts surveyed giving that rating.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.39 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term. The company improved this liquidity measure from 1.37 in the second quarter to the last quarter driven in part by an increase in current assets. Current assets increased 2.6% to $7.9 billion while liabilities rose by 1.5% to $5.69 billion.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)