Northrop Grumman Corporation NOC is set to expand its share repurchase program by $3 billion, following the recent approval from its management. This would bring the company’s total outstanding amount available for repurchase to approximately $4.2 billion.
 
The company will buy back its shares occasionally, based on market conditions and management's decisions, either on the stock market or through private deals.

What’s Favoring NOC Stock?

For a defense contractor like Northrop Grumman, factors such as steady order inflow, positive revenue growth and cash flow generation play vital roles in enabling it to duly reward its shareholders with a notable share repurchase program. The recent expansion news bode well.
 
To this end, it is imperative to mention that with its product line being well-positioned in high-priority categories, such as defense electronics, unmanned aircraft and missile defense, Northrop Grumman has been able to win solid contract wins in the recent past. These contracts translated into solid year-over-year revenue growth of 2.3% for NOC in the third quarter of 2024.

NOC’s cash flow from operating activities totaled $1.81 billion during the first nine months of 2024, which was higher than $1.45 million in the year-ago period.

Such solid cash flow generation must have enabled the company to decide the further expansion of its share repurchase program and thereby attract more investors to add it to their portfolio.

Will NOC Stock’s Share Repurchase Sustain?

As of Sept. 30, 2024, Northrop Grumman had a solid backlog worth $84.80 billion. Of this backlog, the company expects to recognize approximately 40% and 65% as revenues over the next 12 months and 24 months, respectively, with the remainder to be recognized thereafter.

Such a solid backlog count, backed by the increasing demand for the company’s defense products and rising global defense budget, should duly translate into strong revenue growth. This, in turn, can be expected to continue to boost NOC’s financial strength, thereby enabling it to continue to offer notable shareholder value with significant share buybacks and even indulge in expansion of such buybacks in times of a business boom.

Other Defense Companies in Focus

Other defense companies that have also enhanced their shareholder value by increasing share repurchase programs are discussed below.

Lockheed Martin Corporation LMT: In October 2024, Lockheed Martin’s board of directors authorized an increase of $3 billion to its share repurchase program, thereby increasing the total authorization of the current program to $10.3 billion for future purchases.

Lockheed Martin has a long-term (three to five years) earnings growth rate of 4.5%. The Zacks Consensus Estimate for LMT’s 2024 sales indicates year-over-year growth of 5.5%.

CurtissWright Corporation CW: In September 2024, CurtissWright increased its 2024 share repurchase program by $100 million, bringing the total expected repurchases to $150 million for this year. It is also completing its existing $50 million repurchase program initiated in January 2024 under the 10b5-1 program.
 
CW has a long-term earnings growth rate of 11.7%. The Zacks Consensus Estimate for CW’s 2024 sales indicates year-over-year growth of 8.4%.

NOC Stock’s Price Movement

Shares of NOC have gained 14.2% in the past six months against the industry’s 1.8% decline.

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Zacks Rank & A Stock to Consider

NOC currently carries a Zacks Rank #3 (Hold).
 
A better-ranked stock in the same industry is Leidos Holdings, Inc. LDOS. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

LDOS has a long-term earnings growth rate of 14.8%. The Zacks Consensus Estimate for LDOS’ 2024 sales indicates year-over-year growth of 6.1%.

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