NOC - Embedded Expectations Analysis - 2021 09 14
Northrop Grumman Corporation (NOC:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 15.3x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about meeting their guidance, their Space Systems business, and their digital transformation initiatives.Specifically, management may be exaggerating the cost savings from their digital transformation initiative, and they may lack confidence in their ability to reduce inflationary risks. In addition, they may lack confidence in their ability to achieve their Aeronautics sales guidance, meet earnings per share (EPS) guidance, and sustain the growth of their Space Systems business. Also, management may be concerned about their long-term investment plans and accelerated share repurchase plan in the second quarter. Finally, they may lack confidence in their ability to maintain high volumes on restricted programs for Manned Aircraft, manage their budget for Global Hawk and Triton, and install upgrades to their platforms and sensors to improve cross-communication.
Northrop Grumman is a security company. The company's segments include: Aerospace Systems, which is engaged in the design, development, integration and production of manned aircraft, autonomous systems, spacecraft, high-energy laser systems, microelectronics and other systems and subsystems; Innovation Systems, which is engaged in the design, development, integration and production of flight, armament and space systems; Mission Systems, which is engaged in end-to-end mission solutions and multifunction systems; and Technology Services, which is engaged in delivering solutions and services in support of mission-critical networks and systems.
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