Group 1 - Northrop Grumman Corporation is set to release its second-quarter earnings results on July 22, with expected earnings of $6.68 per share, an increase from $6.36 per share in the same period last year [1] - The company is projected to report quarterly revenue of $10.15 billion, slightly down from $10.22 billion a year earlier [1] - On May 29, Northrop Grumman issued $1 billion in new senior notes, divided into two tranches maturing in 2030 and 2035 [2] Group 2 - Northrop Grumman shares experienced a decline of 0.7%, closing at $515.29 [2] - Recent analyst ratings show a downgrade from Deutsche Bank from Buy to Hold, with a price target reduction from $580 to $542 [8] - Other analysts have maintained or adjusted their ratings and price targets, with Wells Fargo reducing its target from $547 to $525, RBC Capital from $575 to $550, and Truist Securities from $600 to $550 [8]

Three defense titans, three different flight paths — but only one may come out on top when Lockheed Martin (LMT), RTX Corp RTX, and Northrop Grumman Corp NOC report earnings Tuesday before the bell. With investors closely tracking valuation, momentum, and technicals, this aerospace earnings face-off is about to get turbulent.RTX: Flying High, Valued HigherRTX has been the surprise high-flyer. With a 47% gain over the past year and a 32% YTD rally, it's the clear momentum leader. Technically, it's flashing b ...

Core Viewpoint - Northrop Grumman Corporation (NOC) is expected to report its second-quarter 2025 results on July 22, with a projected earnings per share (EPS) of $6.70, reflecting a 5.4% increase year-over-year, despite challenges in the Space Systems segment [1][9]. Revenue Performance by Segment - **Aeronautics Systems**: Anticipated revenue of $3,151.1 million, representing a 6.3% increase from the previous year, driven by higher production of F-35 jets and Global Hawk sustainment activities [2][1]. - **Defense Systems**: Expected revenue of $1,860.2 million, indicating a significant 22.9% growth year-over-year, supported by increased sales from the Sentinel program and military ammunition programs [3][1]. - **Mission Systems**: Projected revenue of $2,904.7 million, showing a 4.7% increase from the prior year, aided by higher sales from various radar and electronic warfare programs [4][1]. - **Space Systems**: Forecasted revenue of $2,704.8 million, reflecting a decline of 24.3% year-over-year, primarily due to the wind-down of restricted space programs and fewer resupply missions [5][1]. Overall Financial Outlook - The total sales estimate for NOC is $10.11 billion, which represents a slight decrease of 1.1% from the previous year, largely influenced by the downturn in the Space Systems segment [8][1]. - The backlog for NOC is projected to increase by 15% year-over-year to $95.61 billion, indicating strong future demand [6][1]. Earnings Prediction - The earnings performance is expected to benefit from higher operating income in the Defense Systems segment, although losses related to the B-21 program and lower income in Space Systems may negatively impact overall results [9][1]. - The Zacks model indicates that NOC does not conclusively predict an earnings beat this quarter, with an Earnings ESP of +3.10% and a Zacks Rank of 4 (Sell) [10][1].

Core Viewpoint - Northrop Grumman (NOC) is expected to report quarterly earnings of $6.75 per share, reflecting a year-over-year increase of 6.1%, while revenues are anticipated to be $10.11 billion, showing a decrease of 1.1% compared to the previous year [1]. Earnings Estimates - Over the last 30 days, the consensus EPS estimate has been revised downward by 0.3%, indicating a collective reassessment by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate revisions and short-term stock price performance [3]. Key Metrics Projections - Analysts project 'Sales- Mission Systems' to reach $2.90 billion, a change of +4.8% year-over-year [5]. - 'Sales- Aeronautics Systems' is expected to be $3.15 billion, indicating a +6.4% change from the prior year [5]. - 'Sales- Space Systems' is forecasted to be $2.70 billion, reflecting a significant decrease of -24.3% year-over-year [5]. - 'Sales- Defense Systems' is anticipated to reach $1.86 billion, showing a +23% increase from the previous year [6]. Operating Income Projections - 'Operating income (loss)- Defense Systems' is expected to be $183.70 million, down from $204.00 million reported in the same quarter last year [6]. - 'Operating income (loss)- Mission Systems' is projected at $421.42 million, up from $361.00 million in the prior year [7]. - 'Operating income (loss)- Space Systems' is estimated to be $283.42 million, down from $324.00 million year-over-year [7]. - 'Operating income (loss)- Aeronautics Systems' is expected to reach $301.27 million, slightly up from $295.00 million in the same quarter last year [8]. - The consensus for 'Segment operating income adjustment- FAS/CAS operating adjustment' is $65.27 million, compared to $6.00 million in the previous year [8]. Stock Performance - Northrop Grumman shares have returned +5.1% over the past month, outperforming the Zacks S&P 500 composite's +4.2% change [8].

Core Viewpoint - Northrop Grumman (NOC) is expected to report a year-over-year increase in earnings despite lower revenues, with the actual results being crucial for stock price movement [1][2]. Earnings Expectations - The consensus estimate for Northrop Grumman's quarterly earnings is $6.70 per share, reflecting a year-over-year increase of +5.4% [3]. - Revenues are projected to be $10.11 billion, which is a decrease of 1.1% compared to the same quarter last year [3]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised down by 0.56%, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Northrop Grumman is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +3.10% [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [10]. - Northrop Grumman currently holds a Zacks Rank of 4, which complicates the prediction of an earnings beat despite the positive Earnings ESP [12]. Historical Performance - In the last reported quarter, Northrop Grumman was expected to post earnings of $6.21 per share but delivered $6.06, resulting in a surprise of -2.42% [13]. - Over the past four quarters, the company has beaten consensus EPS estimates three times [14]. Conclusion - While Northrop Grumman may not be a compelling earnings-beat candidate, investors should consider other factors when making investment decisions ahead of the earnings release [17].

Core Insights - Northrop Grumman Corp.'s business unit secured a modification contract for E-2D Advanced Hawkeye jets valued at nearly $46.7 million, expected to be completed by May 2029 [1][3][9] Contract Details - The contract involves support for integrating production attrition capabilities, including software and hardware updates throughout the aircraft's life cycle, covering design, programming, integration, manufacturing, quality checks, and testing [2] - The work will be executed across multiple locations in the United States [3] Industry Outlook - Rising military conflicts and technological advancements are driving nations to increase defense spending, with a forecasted compound annual growth rate of 4.7% for the global military aviation market from 2025 to 2030 [4] - Northrop Grumman's E-2D Advanced Hawkeye aircraft enhances combat management and battlespace awareness, contributing to solid order flows and future revenue growth [6] Competitor Analysis - Other aerospace companies likely to benefit from the expanding military aviation market include Boeing, Lockheed Martin, and Embraer, each with strong growth projections for the coming years [7][8][10][11] Stock Performance - Northrop shares have increased by 4% over the past month, outperforming the industry growth of 2.8% [12]

Group 1: Company Ratings Adjustments - Deutsche Bank analyst Scott Doyshler adjusted ratings for three defense companies ahead of Q2 earnings season, upgrading General Dynamics (GD.US) from "Hold" to "Buy" and downgrading Northrop Grumman (NOC.US) and BWX Technologies (BWXT.US) to "Hold" [1] - The firm anticipates a mixed performance among large defense stocks in Q2, with some companies facing earnings guidance risks while others may see positive revisions [1] Group 2: General Dynamics (GD.US) - Deutsche Bank highlighted three core advantages supporting the upgrade for General Dynamics: leading EBIT growth in the industry with a projected 7.4% CAGR over the next three years, strong Gulfstream business jet deliveries, and a favorable federal shipbuilding outlook [2] - The company’s free cash flow yield is projected at 5.6% for 2026, higher than Northrop Grumman's 4.8%, and its P/E ratio of 17.6x shows a 16% discount to the S&P 500, indicating attractive valuation [2] - Q2 EPS for General Dynamics is expected to exceed market consensus by 6%, potentially leading to an upward revision of full-year guidance [2] Group 3: Northrop Grumman (NOC.US) - Despite an expected 11% beat in Q2 EPS due to the divestiture of training business, sales and EBIT are likely to fall short of market expectations [3] - Concerns over high valuation relative to earnings growth trajectory, along with risks from project delays and cancellations, prompted a downgrade to "Hold" [3] - The target price was reduced from $580 to $542, reflecting a slight adjustment in free cash flow yield from 4.75% to 5% [3] Group 4: BWX Technologies (BWXT.US) - BWX Technologies benefits from the nuclear energy sector's momentum, but Deutsche Bank downgraded its rating to "Hold" based on a more rigorous valuation framework [4] - Even under optimistic assumptions, a 50x P/E based on 2025 free cash flow reflects long-term potential adequately, with the target price raised from $119 to $150, indicating limited undervaluation at current levels [4] Group 5: Industry Outlook - The defense sector is expected to experience structural performance differentiation in Q2, with Lockheed Martin (LMT.US) potentially facing a 20% EPS decline due to $300 million in classified aviation expenses [5] - RTX (RTX.US) may exceed expectations but will need to lower guidance to account for tariff impacts, while Curtiss-Wright (CW.US) and L3Harris (LHX.US) are likely to outperform and raise guidance [5] - General Dynamics, RTX, and Curtiss-Wright are identified as preferred buy candidates due to their earnings resilience and valuation alignment, although the overall defense sector faces challenges related to execution stability and earnings volatility [5]

Company Overview - Northrop Grumman is a leading global defense contractor with a diversified portfolio that includes aeronautics, mission systems, defense, and space [5] - The company serves government agencies worldwide, primarily the U.S. Department of Defense and allied defense organizations [8] Financial Performance - Northrop Grumman's market capitalization is $72.6 billion, with a revenue of $40.37 billion and a net income of $3.71 billion for the trailing twelve months (TTM) [3] - The company reported a decline in sales and profits in Q1, primarily due to challenges in its space business, but has maintained its sales guidance of $42 billion to $42.5 billion for the full year, indicating a potential growth of approximately 2% [6][9] - Free cash flow (FCF) guidance for the year is set between $2.85 billion and $3.25 billion, suggesting a growth of around 10% at the lower end of the range [9] Investment Activity - LVM Capital Management increased its stake in Northrop Grumman by 6,237 shares during Q2 2025, bringing its total holding to 39,485 shares valued at $19.74 million [2] - The recent purchase totaled $3.16 million, adjusting the fund's allocation in Northrop Grumman to 2.05% of its reportable assets [2] Stock Performance - Northrop Grumman shares closed at $504.20 on July 7, 2025, reflecting a 15.3% increase over the past year and outperforming the S&P 500 by 3.4 percentage points [7] - The stock is currently trading 7% below its 52-week high, with a dividend yield of 1.84% and a forward price/earnings ratio of 19.9 [7] Backlog and Future Outlook - The company's backlog reached a record $92.8 billion, supported by net awards worth $10.8 billion in Q1, indicating strong demand in the defense sector [10] - Northrop Grumman anticipates its annual free cash flow to exceed $3.3 billion by 2027, with a significant portion expected to be returned to shareholders as dividends [10]

Core Insights - The U.S. military and Congress are accelerating the production of the B-21 stealth bomber, with a planned investment of $10.3 billion in fiscal year 2026 for development, manufacturing, and capacity enhancement [1] - The production rate for the B-21 is projected to be approximately 7 aircraft per year, with production potentially concluding in the mid-2030s based on a plan to purchase 100 aircraft [1] - The Trump administration's tax legislation provided a total of $4.5 billion to accelerate B-21 manufacturing capabilities, with $2.4 billion allocated for research and $2.1 billion for procurement [1] - An additional $3.4 billion has been requested by the U.S. Air Force for B-21 production, alongside $2.3 billion for research, development, testing, and evaluation [1] - It remains unclear whether Northrop Grumman can accelerate B-21 production at its Palmdale, California facility by simply increasing tools and workforce, or if a separate manufacturing base is required [1]

Core Viewpoint - Northrop Grumman's BOLE booster test experienced a significant anomaly during its ground test, raising concerns about the performance and safety of the new solid rocket technology [1][3][7]. Group 1: Test Details - The BOLE booster underwent a ground test called "Demonstration Motor-1" on June 26, 2023, at a facility in Utah, aiming for a 140-second ignition [1]. - The test included 763 measurement points to monitor engine performance and a CO2 extinguishing system for safety [1][3]. - An anomaly occurred at 101 seconds into the test, where the throat of the nozzle burned through, leading to a rupture and flame ejection [1][3]. Group 2: Technical Specifications - BOLE is designed to replace the current Space Launch System's solid rocket boosters, utilizing advanced T1100 carbon fiber casing and hydroxyl-terminated polybutadiene solid propellant [3][5]. - The new design aims to produce over 1800 tons of thrust, improving the SLS's lunar payload capacity to over 46 tons [3][5]. - The test used IM7/T300 carbon fiber for the casing, with plans to switch to T1100 in future tests [5]. Group 3: Historical Context and Comparisons - This is not the first anomaly for Northrop Grumman; a similar issue occurred during the 2019 ground test of the Castor-600 solid rocket engine, where the nozzle ruptured due to pressure changes [9][12]. - The BOLE booster is seen as a larger version of the OmegA rocket, which was previously abandoned but provided valuable technology for BOLE's development [12]. Group 4: Future Implications - Despite the anomaly, the issues are not expected to derail the U.S. lunar return plans, although the low production rate of the SLS may delay future missions [18]. - The BOLE booster is set to be integrated into the SLS for its ninth mission, with ongoing tests planned to assess performance under various environmental conditions [5][18].