Why Northrop Grumman (NOC) Can Go Higher

NEW YORK (TheStreet) -- Northrop Grumman (NOC) shares could rise as high as $115 according to Credit Suisse.

Northrop Grumman fell 0.4% to $112.79.

The analyst firm raised its estimates for the aerospace company following its new guidance. The new guidance calls for revenue of $23.5 billion to $23.8 billion in 2014 with earnings of $8.70 to $9 a share for the year.

Credit Suisse maintained its "neutral" rating for Northrop Grumman.

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Separately, TheStreet Ratings team rates NORTHROP GRUMMAN CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NORTHROP GRUMMAN CORP (NOC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and good cash flow from operations. We feel these 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 71.00% 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.
  • NORTHROP GRUMMAN CORP has improved earnings per share by 17.6% 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. We feel that this trend should continue. During the past fiscal year, NORTHROP GRUMMAN CORP increased its bottom line by earning $7.80 versus $7.43 in the prior year. This year, the market expects an improvement in earnings ($8.16 versus $7.80).
  • The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.38, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $950.00 million or 16.99% when compared to the same quarter last year. Despite an increase in cash flow of 16.99%, NORTHROP GRUMMAN CORP is still growing at a significantly lower rate than the industry average of 70.82%. You can view the full analysis from the report here: NOC Ratings Report

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