Northrop Grumman: 9 Different Insiders Have Sold Shares During The Last 30 Days

| About: Northrop Grumman (NOC)

In this article, I will feature one industrial stock that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Northrop Grumman Corporation (NYSE:NOC) provides systems, products, and solutions in aerospace, electronics, information systems, and technical service areas to government and commercial customers worldwide.

Click to enlarge

Insider selling during the last 30 days

Here is a table of Northrop Grumman's insider activity during the last 30 days.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Denise Peppard VP Feb 27 4,548 No 11,961 shares 27.5%
Gloria Flach VP Feb 24 5,997 Yes 11,937 shares 33.4%
Michael Hardesty VP Feb 24 3,620 No 8,578 shares 29.7%
James Palmer CFO Feb 11-24 44,589 Yes 237,143 shares 15.8%
Sheila Cheston VP Feb 18-21 22,862 Yes 41,738 shares 35.4%
Vic Fazio Director Feb 19 3,281 No 33,696 shares 8.9%
Linda Mills VP Feb 12 46,869 No 82,894 shares 36.1%
Aulana Peters Director Feb 12 281 No 23,974 shares 1.2%
Wesley Bush CEO Feb 11 30,000 Yes 65,501 shares 31.4%
Click to enlarge

There have been 162,047 shares sold by insiders during the last 30 days. Gloria Flach, James Palmer, Sheila Cheston, and Wesley Bush sold shares pursuant to a Rule 10b5-1 plan. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Northrop Grumman's insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
February 2014 162,047 0
January 2014 0 0
December 2013 91,646 0
November 2013 136,960 0
October 2013 55,264 1,000
September 2013 0 0
August 2013 121,900 0
July 2013 0 0
June 2013 74,123 0
May 2013 88,407 0
April 2013 9,680 0
March 2013 3,500 0
February 2013 0 0
January 2013 0 0
Click to enlarge

There have been 743,527 shares sold, and there have been 1,000 shares purchased by insiders since January 2013. The month of February 2014 has seen the most insider selling.

Financials

Northrop Grumman reported the full-year 2013 financial results on January 30 with the following highlights:

Revenue $24.7 billion
Net income $2.0 billion
Cash $5.2 billion
Debt $5.9 billion
Backlog $37.0 billion
Click to enlarge

Northrop Grumman's revenues peaked in 2010.

Outlook

Northrop Grumman's 2014 guidance is as follows:

Revenue $23.5-$23.8 billion
EPS $8.70-$9.00
Click to enlarge

Click to enlarge

(Source: Earnings presentation)

Competition

Northrop Grumman's competitors include Boeing (NYSE:BA), General Dynamics (NYSE:GD), and Lockheed Martin (NYSE:LMT). Here is a table comparing these companies.

Company NOC BA GD LMT
Market Cap: 26.23B 95.32B 38.87B 52.17B
Employees: 65,300 168,400 96,000 115,000
Qtrly Rev Growth (yoy): -0.05 0.07 0.00 -0.05
Revenue: 24.66B 86.62B 31.22B 45.36B
Gross Margin: 0.22 0.15 0.18 0.10
EBITDA: 3.62B 8.17B 4.24B 5.34B
Operating Margin: 0.13 0.07 0.12 0.10
Net Income: 1.95B 4.58B 2.49B 2.95B
EPS: 8.35 5.96 6.67 9.14
P/E: 14.49 21.52 16.60 17.90
PEG (5 yr expected): 1.72 1.67 1.88 2.17
P/S: 1.06 1.11 1.23 1.14
Click to enlarge

Northrop Grumman, together with Lockheed Martin, has the weakest revenue growth among these four companies.

Here is a table of these competitors' insider activities this year.

Company Insider buying / shares Insider selling / shares
BA 0 48,868
GD 0 271,535
LMT 0 98,228
Click to enlarge

Lockheed Martin, General Dynamics, and Boeing have also seen intensive insider selling during the last 30 days.

Conclusion

There have been nine different insiders selling Northrop Grumman, and there have not been any insiders buying Northrop Grumman during the last 30 days. Seven of these nine insiders decreased their holdings by more than 10%. Northrop Grumman has an insider ownership of 0.40%.

There are four analyst buy ratings, 16 neutral ratings, and zero sell ratings with an average price target of $119.88. Before going short Northrop Grumman, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are bearish analyst price targets, negative revenue growth, and the intensive insider-selling activity.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in BA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.