Why Is Aerospace And Defense Giant Northrop Grumman Stock Taking A Hit Today?

Northrop Grumman Corp NOC reported fourth-quarter fiscal 2023 sales growth of 6% year-over-year to $10.64 billion, beating the consensus of $10.44 billion.

Q4 net loss per share was $(3.54) compared to a $13.46 profit a year ago. Adjusted EPS was $6.27, beating the consensus of $5.80.

NOC recorded a net loss for the quarter due to B-21 charge and MTM expense. Total operating loss for the quarter was $(393) million compared to operating income of $906 million a year ago.

Sales by segments: Aeronautics Systems $2.91 billion (+6% Y/Y), Defense Systems $1.65 billion (-1% Y/Y), Mission Systems $3.06 billion (+5% Y/Y), and Space Systems $3.60 billion (+10% Y/Y).

Northrop Grumman stated that sales reflect continued strong demand for its products and services. Fourth quarter and year-to-date 2023 net awards totaled $10.9 billion and $44.8 billion, and backlog totaled $84.2 billion.

Operating cash flow totaled $2.43 billion for the quarter, compared to $2.25 billion in 2022 same quarter. Adjusted free cash flow was $1.63 billion.

The fiscal 2023 operating cash flow totaled $3.87 billion versus $2.90 billion in 2022. Adjusted free cash flow was $2.1 billion.

“With sustained global demand for our products, our 2024 guidance reflects continued strong sales and earnings growth. In addition, we’re reaffirming our cash flow outlook for 2024 and 2025, with free cash flow expected to grow at a greater than 15 percent CAGR through 2026,” commented Kathy Warden, chair, chief executive officer, and president.

Fiscal 2024 Outlook: Northrop Grumman sees sales of $40.8 billion – $41.2 billion versus the consensus of $41.15 billion; Sees MTM-adjusted EPS of $24.45-$24.85 (consensus $24.23).

It sees Segment operating income of $4.475 billion-$4.55 billion and an adjusted free cash flow of $2.25 billion-$2.65 billion for 2024.

Northrop Grumman reaffirms 2024 and 2025 free cash flow outlook and projects solid growth in 2026. 

Price Action: NOC shares traded lower by 7.75% at $427.97 on the last check Thursday.

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