NEW YORK – Northrop Grumman Corp.(NOC) said Tuesday quarterly profit rose a greater-than-expected 22 percent, helped by sales of unmanned surveillance planes, radar systems and intelligence technology, offsetting lower revenue from shipbuilding operations.
The U.S. No. 2 defense contractor, which makes the Global Hawk spy plane, also raised its full-year earnings-per-share forecast, helped by a large stock buyback campaign, but lowered its full-year revenue view as it plans to quit selling some technology systems made by others.
Its shares rose 1.7 percent, hitting their highest level in more than three years.
Northrop, best known for its B-2 stealth bomber, reported fourth-quarter profit of $331 million, or 92 cents per share, compared with $272 million, or 74 cents per share, in the year-ago quarter.
Revenue rose only slightly to $7.9 billion. Its total backlog of work fell to $56.3 billion at the end of last year from $58.1 billion a year before.
"They (results) were well above expectations, it was a good quarter," said Paul Nisbet at JSA Research, which specializes in aerospace and defense stocks. "I would expect most of these defense firms to flatten out as far as top-line growth is concerned, but for a while at least they are going to maintain growth in the bottom line."
Northrop's profit easily beat Wall Street's average forecast of 84 cents per share, and revenue hit analysts' forecast, according to Reuters Estimates.
For 2006, the company raised its earnings forecast to a range of $4.25 to $4.40 per share, up from a range of $4.10 to $4.30. In October Northrop authorized up to $1.5 billion in stock repurchases, which could mean a buy-back up to 8 percent of its outstanding shares.
Northrop cut its revenue forecast to $31 billion from $32 billion, saying the decrease was due to exiting the technology reselling business and selling off other small units.
Analysts had been expecting average 2006 earnings of $4.25 per share on revenue of $32.2 billion.
Los Angeles-based Northrop, which trails only Lockheed Martin Corp. (LMT) in defense revenue, is one of the firms threatened by Pentagon spending cuts, but is countering with greater emphasis on information technology.
The company, which builds warships at yards in New Orleans, and Pascagoula and Gulfport, Mississippi, suffered about $1 billion in hurricane damage from Hurricane Katrina and saw many of its programs delayed. It expects to get back to normal later this year.
The company's stock rose about 18 percent over the past year, but some investors have concerns about Northrop's slow-growing shipbuilding business. Its shares have recently been trading at around 16 times earnings, at the low end for companies in the Amex Defense Index.
Shares of Northrop were up $1.03 at $61.79 on the New York Stock Exchange.