NEW YORK (TheStreet) -- Shares of Northrop Grumman (NOC) - Get Northrop Grumman Corporation Report are down by 0.15% to $166.19 in mid-morning trading on Thursday, despite the the company being awarded a $3.2 billion contract for the continued development, modernization and maintenance of all U.S. Air Force variants of the Global Hawk surveillance drone.
The Air Force will be able to order parts and services from Northrop Grumman as needed through September 2020, with all work to be completed by September 30, 2025.
Two years ago the Air Force unsuccessfully attempted to retire the Global Hawk drones due to their high costs, but U.S. lawmakers chose to continue the program.
Analysts polled by Bloomberg have a consensus end of the year price target of $182.31 on Northrop Grumman, a potential upside of over 10% from the stock's current price.
Separately, TheStreet Ratings team rates NORTHROP GRUMMAN CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate NORTHROP GRUMMAN CORP (NOC) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, notable return on equity, good cash flow from operations and growth in earnings per share. We feel its strengths outweigh the fact that the company shows low profit margins.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 28.30% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NOC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Aerospace & Defense industry average. The net income increased by 3.9% when compared to the same quarter one year prior, going from $511.00 million to $531.00 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to other companies in the Aerospace & Defense industry and the overall market on the basis of return on equity, NORTHROP GRUMMAN CORP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- Net operating cash flow has slightly increased to $626.00 million or 9.44% when compared to the same quarter last year. Despite an increase in cash flow, NORTHROP GRUMMAN CORP's cash flow growth rate is still lower than the industry average growth rate of 26.85%.
- NORTHROP GRUMMAN CORP has improved earnings per share by 15.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, NORTHROP GRUMMAN CORP increased its bottom line by earning $9.74 versus $8.34 in the prior year. For the next year, the market is expecting a contraction of 0.4% in earnings ($9.70 versus $9.74).
- You can view the full analysis from the report here: NOC