Will Northrop Grumman (NOC) Beat Estimates Again in Its Next Earnings Report?

Looking for a stock that has consistently beaten earnings estimates and could be well-positioned to continue its streak into its next quarterly report? Northrop Grumman (NOC), which belongs to the Zacks Aerospace – Defense industry, could be a great candidate to consider.

The defense contractor has had a good streak of beating earnings estimates, especially looking at the past two reports. The average surprise over the past two quarters was 8.72%.

For the last reported quarter, Northrop Grumman showed earnings of $6.32 per share versus the Zacks consensus estimate of $5.83 per share, representing a surprise of 8.40%. In the previous quarter, the company was expected to show earnings of $5.75 per share and actually produced earnings of $6.27 per share, representing a surprise of 9.04%.

Price and EPS are surprising

With this history, there has been a recent favorable revision in earnings estimates for Northrop Grumman. In fact, the stock’s Zacks Earnings ESP (Expected Surprise Prediction) is positive, which is a great indicator of an earnings beat, especially when paired with a solid Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better deliver a positive surprise almost 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat consensus estimates could be as many as seven.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a revision of the Zacks Consensus definition that is related to revision. The idea is that analysts revising their estimates just before an earnings release have the latest information, which could potentially be more accurate than what they and other contributors to the consensus had previously predicted.

Northrop Grumman currently has an Earnings ESP of +0.86%, suggesting that analysts have become bullish on its near-term earnings potential. When we combine this positive Earnings ESP with the stock’s Zacks Rank #3 (Hold), we can see that another beat is likely just around the corner. The company’s next earnings report is expected to be released on July 25, 2024.

When the Earnings ESP is negative, investors should remember that this will reduce the predictive power of the indicator. However, a negative value is not an indicator of a lack of earnings for the stock.

Many companies end up beating consensus EPS estimates, but that may not be the only basis for their stock growth. On the other hand, some stocks can maintain their position even if they end up missing consensus estimates.

For this reason, it is very important to check a company’s Earnings ESP before its quarterly release to increase your chances of success. Make sure you use our Earnings ESP Filter to discover the best stocks to buy or sell before they are released.

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