Play it Safe with Northrop Grumman Stock

NOC is an intriguing dividend opportunity

Sep 21, 2021 at 12:10 PM
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Defense stock Northrop Grumman Corporation (NYSE:NOC) has taken a nearly 7% haircut in the last three months, after scoring an annual high of $379.02 on June 2. The good news is that this pullback has found support on the charts.

Northrop Grumman stock remains up 13% in 2021, and its 160-day moving average has stepped up as support. Despite only a 6% year-over-year lead, 80% of analysts rate NOC a "buy" or better, and a slim 1% of the stock's total available float is sold short. Moreover, Northrop Grumman Corporation offers a forward dividend of $6.28 and a dividend yield of 1.80%.

NOC Stock Chart

From a fundamental point of view, Northrop Grumman stock is fairly well rounded. NOC trades an intriguing price-earnings ratio of 12.65. Northrop Grumman has also experienced solid and consistent revenue growth in recent years, having increased annual revenues by 46% since fiscal 2017. In addition, NOC's annual net income is up 126% since fiscal 2017, despite net income dropping 30% in fiscal 2019.

One of the biggest issues that NOC has is its weak balance sheet. Northrop Grumman currently holds $3.94 billion in cash and $14.16 billion in debt. Another issue with NOC is that Northrop Grumman stock has a forward price-earnings ratio of 13.70, which is an attractive valuation while also signaling an expected decrease in earnings.

It's also worth noting that NOC ranks low on the Schaeffer's Volatility Scorecard (SVS), with a score of just 19 out of 100. In other words, the security has consistently realized lower volatility than the options pits have priced in, making the equity a potential premium-selling candidate.

 

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