Northrop Grumman Corporation (NYSE:NOC): Poised For Long Term Success?

Looking at Northrop Grumman Corporation’s (NYSE:NOC) earnings update in September 2018, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 16% in the upcoming year compared with the past 5-year average growth rate of 3.8%. Presently, with latest-twelve-month earnings at US$2.0b, we should see this growing to US$2.3b by 2019. Below is a brief commentary on the longer term outlook the market has for Northrop Grumman. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

Check out our latest analysis for Northrop Grumman

What can we expect from Northrop Grumman in the longer term?

The 17 analysts covering NOC view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of NOC’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:NOC Future Profit December 5th 18
NYSE:NOC Future Profit December 5th 18

From the current net income level of US$2.0b and the final forecast of US$2.6b by 2021, the annual rate of growth for NOC’s earnings is 3.9%. EPS reaches $21.54 in the final year of forecast compared to the current $11.55 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 7.8% to 7.6% by the end of 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Northrop Grumman, I’ve compiled three fundamental aspects you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Northrop Grumman worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Northrop Grumman is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Northrop Grumman? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.