Defense Duo: Raytheon and Northrop Grumman


Stephen Leeb Image Stephen Leeb Founder and Research Chairman, Leeb Group

It's been a busy time for our two defense heavyweights Raytheon (RTN) and Northrop Grumman (NOC) as both reported their quarterly results, notes Stephen Leeb, editor of Real World Investing.

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Northrop, which joined our portfolio in early July, upped its 2017 earnings-per-share (EPS) guidance from $11.80-$12.10 to $12.10-$12.40. At the midpoint of the ranges, the increase represents a 5 percent bump.

Furthermore, the company tightened its 2017 revenue guidance to the low $25 billion range. Previously it had estimated “about” $25 billion, which encompasses a fairly wide range. The new guidance narrows the projection to slightly above the midpoint of the previous guidance range.

Northrop’s sales during the second quarter totaled $6.38 billion, a 6 percent improvement on a year-over-year basis. Earnings per share rose 11 percent to $3.15, driven by higher sales, higher operating profit, and a lower share count.

It raised its quarterly dividend 11 percent to $1 a share (annual rate of $4 per share). In the first half of the year, Northrop has returned about $700 million to shareholders through share repurchases and dividend.

Like Northrop, Raytheon also beat expectations on both revenues and earnings.