Summary
- Foreign military sales account for 14.6% of the company’s total sales and can be considered as a key growth catalyst.
- In 2018, Northrop Grumman marked its 15th consecutive year of rising dividend rates.
- The growth rate of Northrop Grumman’s earnings has been weak over the past year.
- The 50 % Fibonacci support level at $259.23 is a make or break point for the stock.
In my last article on January 21st, I had looked at the fundamental news affecting the defense sector in 2019. However, in this article, I will focus on Northrop Grumman (NOC) as I believe the stock is at a crossroad. Nevertheless, I am leaning towards the bears winning the race as the odds seem to be stacked in their favor. To establish the most likely scenario, I will look at the fundamentals of the stock, while, also analyzing the chart using technical analysis tools.
Fundamental facets that matter:
Foreign military sales:
Foreign military sales account for 14.6% of the company's total sales and can be considered as a key growth catalyst. The firm's international sales value in 2018 came in at $4.4 billion, which is an increase of 33.25% on a year-over-year basis. Looking ahead, I expect the foreign sales level to grow further as the firm's products are enjoying a high level of demand in the international market. This is as the SABR radar Global Hawk is becoming somewhat popular in Asia and the Middle East. Thus, I expect this to boost the firm's profitability in the coming quarters.
