Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.
Northrop Grumman is a leading global security company providing innovative systems, products and solutions in unmanned systems, cyber, C4ISR, and logistics and modernization to government and commercial customers worldwide. It has a market cap of $26-billion (U.S.).
It trades for 13.9 times ttm EPS. It has a return on capital using the Joel Greenblatt-based model's EBIT/tangible capital employed metric of 45.1 per cent, one reason it gets strong interest from the Greenblatt-inspired model. The Greenblatt model also likes its 11.8-per-cent earnings yield, using EBIT/enterprise value.
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The company has grown EPS at a 16-per-cent clip over the long term (using avg of 3, 4 and 5yr EPS growth rates), part of why it gets strong interest from Peter Lynch model. The Lynch model also likes its 0.75 yield-adjusted P/E-to-growth ratio.
Northrop Grumman has a 2.1-per-cent dividend. It has debt/equity ratio of 60 per cent, which the Lynch model thinks is reasonable.
The James O'Shaughnessy-based growth model likes that it has upped EPS in each year of past half decade. The O'Shaughnessy approach also likes its combo of a strong 12 month relative strength of 78 and a reasonable price/sales ratio of 1.1.
The company has averaged net profit margin of 7.9 per cent over past three years, which the Kenneth Fisher-based model likes.
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EPS have dipped just once in past decade, impressing the Warren Buffett-based model.
It has a 21-per-cent return on equity
John Reese is long NOC.
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