NOC’s stock performance declined, but investors were confident

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Northrop’s stock performance

Northrop Grumman’s (NOC) stock performance saw a decline before the quarterly results were announced. NOC is a major holding of the iShares US Aerospace & Defense ETF (ITA).

The declining trend is similar to other companies’ trends in the industry—like Embraer SA (ERJ) and Spirit AeroSystems Holdings (SPR). You can read Lockheed Martin’s (LMT) detailed stock price analysis in “Why Lockheed Martin’s share price fell after the results.”

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The shares were trading in a tight range of 120–125 until the week of the results. However, the results had a positive impact on NOC’s stock performance. This could be due to NOC’s surprise earnings per share (or EPS) growth. Also, NOC has the ability to sustain its operational margins despite its lower revenue. It could also be due to growth in NOC’s order backlog. This would mean improved revenues in the future.

NOC stock movement

Despite the performance decline, investors stayed with NOC. Investors are confident in the company’s growth outlook for the future. The stock remained steady after the results were announced.

NOC Dividends

Investors’ confidence

Investors are confident in NOC because the company has been very consistent in its dividend payout—as shown in the above chart. The company paid its stakeholders consistently. However, it also maintained a growth in dividends every few quarters. This indicates a company’s health. It also shows NOC’s willingness to return profits to its shareholders. The process sends a positive message about the company’s confidence in its future prospects. It shows NOC’s ability to generate funds to sustain its future growth.

In the next part of this series, we’ll discuss the Highway Transportation and Funding Act (or HAFTA).

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