Northrop Grumman Delivers Reasons for Concern in Its Earnings Report

On the surface, Northrop Grumman (NYSE: NOC) delivered blowout third-quarter results, with earnings beating consensus estimates by about $0.70 per share. But a deeper look shows that not all was as rosy as the headline numbers would imply.

Revenue for the quarter came in a bit shy of expectations, and much of the earnings-per-share beat is attributable to tax and pension adjustments, not from operations. Northrop's initial 2020 guidance for mid-single-digit sales growth was a bit of a disappointment. The company also revealed that regulators are probing whether it is living up to the terms imposed on it when it was allowed to buy Orbital ATK in 2018, a fresh complication to Northrop's effort to win a $60 billion contract to replace the Air Force's intercontinental ballistic missiles.