Why Northrop Grumman (NOC) Stock Is Up

NEW YORK (TheStreet) -- Shares of Northrop Grumman Corp.  (NOC) are up 1.20% to $122.05.

CEO Wes Bush said that despite belt-tightening at the Pentagon, defense contractors can count on the military's continuing need for advanced technology and personnel training as well as expanded opportunities for exports to allies, the Wall Street Journal reported.

Bush said the company's strategy isn't just to chase growth. 

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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, 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 has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, NOC's share price has jumped by 63.24%, exceeding the performance of the broader market during that same time frame. 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 current debt-to-equity ratio, 0.56, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.35, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $1,204.00 million or 13.90% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 3.67%.
  • NORTHROP GRUMMAN CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NORTHROP GRUMMAN CORP increased its bottom line by earning $8.34 versus $7.80 in the prior year. This year, the market expects an improvement in earnings ($8.95 versus $8.34).
  • You can view the full analysis from the report here: NOC Ratings Report

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