NEW YORK (TheStreet) -- Shares of Northrop Grumman (NOC) climbed to close higher by 5.61% to $147.69 on heavy volume Friday, after the company was added to Goldman Sachs' "conviction buy" list and announced its new $3 billion buyback plan.
The aerospace company was upgraded at Goldman Sachs to "conviction buy" from its previous "buy" rating. Analysts at the firm also raised the company's price target to $165 from $163.
Goldman believes the company's position as the biggest subcontractor in the Pentagon's largest growth program, the Joint Strike Fighter, makes it a premium buy.
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Late Thursday, the company announced its $3 billion dollar repurchase program, and added that it aims to buy back a quarter of its shares by the end of next year.
About 1.76 million shares traded hands in today's session, compared to its average trading volume of about 1.22 million shares a day.
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 and reasonable valuation levels. 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:
- 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 26.32% 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 5.6% 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 $8.34 versus $7.80 in the prior year. This year, the market expects an improvement in earnings ($9.48 versus $8.34).
- The current debt-to-equity ratio, 0.60, 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 1.20, which illustrates the ability to avoid short-term cash problems.
- NOC, with its decline in revenue, slightly underperformed the industry average of 0.7%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: NOC Ratings Report