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Northrop Grumman stock prediction after delivering mixed Q3 results

By:
on Oct 28, 2021
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  • Northrop Grumman shares on Thursday plunged by nearly 7% after reporting its FQ3 results.
  • The company announced its most recent quarterly earnings before markets opened, beating Street estimates.
  • However, revenue for the quarter fell from the same period a year ago, missing expectations.

On Thursday, Northrop Grumman Corp (NYSE:NOC) shares declined by nearly 7% after announcing its most recent quarterly results. The international aerospace and defence company reported its fiscal third-quarter earnings before markets opened, beating the consensus for analyst estimates. However, its quarterly revenue fell short of expectations from declining on a Y/Y basis.

Northrop posted FQ3 non-GAAP earnings per share of $6.63, beating the average for analyst estimates of $5.98. In addition, its GAAP EPS of $6.63, was also ahead of the Street forecast of $5.95, while revenue fell by 4% from the same quarter a year ago to $8.72 billion, $220 million below expectations.

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Is Northrop undervalued?

From an investment perspective, Northrop Grumman shares trade at compelling trailing 12-month and forward P/E ratios of 13.04 and 13.92, respectively. Therefore, the stock could be an exciting option for value investors.

In addition, analysts expect its earnings per share to grow by nearly 44% this year, before rising at an average annual rate of about 6.7% over the next five years. As a result, the stock could also gain the attention of growth investors.

Source – TradingView

Technically, Northrop Grumman shares seem to have recently plummeted to complete a downward breakout from an ascending channel formation. As a result, the stock has fallen to trade below the 100-day moving average in the intraday chart.

In addition, the NOC stock also appears to have moved closer to the oversold conditions of the 14-day RSI. Therefore, a short-term rebound could be imminent.

Investors could target profits at about $373.05, or higher at $394.28, while $351.82 and $337.83 are crucial support zones.

Is the NOC pullback an opportunity to buy?

In summary, Northrop Grumman stock is now up about 22.60% this year following Thursday’s pullback. Therefore, given the compelling valuation multiples and the company’s growth outlook, the pullback may have created an opportunity to buy.

Moreover, with shares falling closer to oversold conditions, a rebound could be on the horizon.