One-Hour Analysis of Northrup Grumman

From Value Line

  • Stock has consistently underperformed since 2002, stock has been flat for over 10 years
  • Stock is cheap in term of cash flow, not that cheap in terms of book value
  • Took a big charge in 2008, a pretty good size negative
  • Made several large and probably bad acquisitions in 2001-2
  • Have done a spectacular job of deleveraging ever since
  • Balance sheet is almost “too good”, they could certainly afford acquisitions, over $3 billion in cash
  • Margins are at all time highs, this is more a negative than a positive
  • Impressive size of stock buyback, these guys have really “got religion” in terms of really working for shareholder
  • VL shows small pension liability, this needs further investigation
  • Lots of mixed signals here, not quite as clean as LLL

[Read more…]