Northrop Stock Surpasses Q4 Earnings, Misses Sales Expectations

Core Insights - Northrop Grumman Corporation (NOC) reported strong fourth-quarter 2024 adjusted earnings of $6.39 per share, exceeding the Zacks Consensus Estimate of $6.27 by 1.9% and significantly improving from a loss of $1.45 per share in the same quarter last year [1][2] - The company achieved total sales of $10.69 billion in the fourth quarter, which was below the Zacks Consensus Estimate of $11.03 billion by 3.1%, but showed a slight year-over-year increase of 0.5% from $10.64 billion [3] - For the full year 2024, NOC reported adjusted earnings of $26.08 per share, surpassing the Zacks Consensus Estimate of $25.96 by 0.5% and improving from $15.61 in 2023 [2] Financial Performance - NOC's GAAP earnings for the fourth quarter were $8.66 per share, a significant recovery from a GAAP loss of $3.54 in the fourth quarter of 2023 [2] - The company's total sales for 2024 reached $41.03 billion, missing the Zacks Consensus Estimate of $41.37 billion, but representing a 4% increase from $39.29 billion in 2023 [4] - Operating income for the fourth quarter totaled $1.19 billion, a notable improvement from $0.38 million in the prior-year quarter, driven by higher income in Aeronautics Systems and Defense Systems [10] Segment Performance - Aeronautics Systems segment sales increased by 11% year-over-year to $3.22 billion, with operating income rising to $292 million from a loss of $1,271 million in the fourth quarter of 2023 [6] - Mission Systems segment sales grew by 3% to $3.14 billion, with operating income increasing by 2% to $469 million, although the operating margin contracted by 20 basis points to 14.9% [7] - Defense Systems segment sales rose by 5% to $2.33 billion, with operating income improving by 13% to $252 million, despite a deterioration in operating margin by 80 basis points to 10.8% [8] - Space Systems segment sales declined by 13% to $2.71 billion, with operating income decreasing by 5% to $275 million, although the operating margin expanded by 70 basis points to 10.1% [9] Backlog and Financial Condition - The total backlog for NOC at the end of the fourth quarter was $91.47 billion, an increase from $84.80 billion at the end of the third quarter [5] - As of December 31, 2024, the company's cash and cash equivalents totaled $4.35 billion, up from $3.11 billion a year earlier, while long-term debt increased to $14.69 billion from $13.79 billion [11] 2025 Guidance - NOC provided guidance for 2025, expecting revenues in the range of $42.00-$42.50 billion, with the consensus estimate at $42.86 billion [12] - The company anticipates adjusted earnings between $27.85-$28.25 per share, aligning with the lower end of the consensus estimate of $27.85 per share [12] - NOC projects adjusted free cash flow to be in the range of $2.85-$3.25 billion for 2025 [12]