Northrop Grumman: B-21 Blow Triggers Earnings Disappointment

(9min)

Summary

  • Northrop Grumman's Q1 earnings missed expectations due to significant cost growth on the B-21 program, leading to a 49% profit decline.
  • Despite a challenging environment, the company maintained sales guidance but lowered its profit outlook, reflecting B-21 charges and cost pressures.
  • The stock is downgraded to hold due to high valuation and ongoing cost issues, despite the potential for future cost efficiencies and production rate increases.
  • Northrop Grumman's 21-year dividend growth streak is commendable. But current stock levels are considered pricey with limited upside absent multiple expansions.
  • Looking for more investing ideas like this one? Get them exclusively at The Aerospace Forum. Learn More »
Airplanes B-2 bomber and pair of F-35 Lightning jet fighters flying over the 2018 Tournament of Roses Parade in Pasadena, California

KGrif

Northrop Grumman (NYSE:NOC) reported earnings on April 22, and those earnings were not well-received, with a charge on the B-21 stealth bomber and an adjustment on the financial guidance for the full year. Northrop Grumman reached the $547 price target I

This article was written by

19.74K Followers

Dhierin-Perkash Bechai is an aerospace, defense and airline analyst.

Dhierin runs the investing group The Aerospace Forum, whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with significant growth prospects, and offers context to developments as they occur, describing how they might affect investment theses. His investing ideas are driven by data informed analysis. The investing group also provides direct access to data analytics monitors. Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of NOC either through stock ownership, options, or other derivatives. 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.

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