Northrop Noses Ahead: Fool by Numbers

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On April 24, defense contractor Northrop Grumman (NYSE: NOC) released first-quarter earnings for the period ended March 31.

• Revenues rose by 3.5%, backed by over 10% revenue growth in information systems, and partially offset by a decline in revenues from the aerospace division.
• Management says results were slightly affected by a shipbuilder's strike in Mississippi.
• Total revenue for 2007 is expected to be between $31 billion and $32 billion, with EPS from continuing operations in a range between $4.80 and $5.05. Look for $2.5 billion to $2.8 billion in net cash from operating activities.
• Northrop rates a middling three stars out of five in Motley Fool CAPS.

(Figures in millions, except per-share data.)

Income Statement Highlights

	Q1 2007	Q1 2006	Change
Sales	$7,344	$7,093	3.5%
Net Profit*	$387	$362	6.9%
EPS	$1.10	$1.03	6.8%
Diluted Shares	358.3	350.8	2.1%

*Income from continuing operations

Get back to basics with the income statement.

Margin Checkup

	Q1 2007	Q1 2006	Change*
Gross Margin	No Data	No Data	No Data
Operating Margin	9.3%	8.5%	0.8
Net Margin	5.3%	5.1%	0.2

*Expressed in percentage points

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q1 2007	Q1 2006	Change
Cash + ST Invest.	$362	$373	(2.9%)
Accounts Rec.	$3,749	$4,144	(9.5%)
Inventory	$1,195	$1,294	(7.7%)

Liabilities	Q1 2007	Q1 2006	Change
Long-Term Debt*	$4,392	$4,714	(6.8%)

*Total debt

The balance sheet reflects the company's health.

Cash Flow Highlights

	Q1 2007	Q1 2006	Change
Cash From Ops.	$400	($115)	N/A
Capital Expenditures*	$188	$173	8.7%
Free Cash Flow	$212	($288)	N/A

*Includes outsourcing contract and related software costs.

Free cash flow is a Fool's best friend.

Related Foolishness:

• Foolish Forecast: Get to Know Northrop
• Foolish Forecast: Locking In on Lockheed
• Foolish Forecast: Raytheon Rumbles

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.