A dip in one of your favorite company’s stock prices is no need to sell. In fact, many times it’s a good thing. In today’s blog I want to reveal to you one of my favorite stocks, as well as why today’s dip in its share price, in my opinion, is a very good thing…
Northrop Grumman Corporation (NOC) released excellent fiscal first-quarter results on Wednesday morning. Compared with the year ago quarter, earnings per share jumped 14% to $4.21 while sales rose 5% to $6.7 billion. Analysts were expecting $3.64 EPS on $6.61 billion in revenue, so Northrop Grumman posted a 15.7% earnings surprise and a 1.4% sales surprise.
Northrop Grumman also increased its earnings outlook for 2018. The company is now expecting earnings per share to range between $15.40 and $15.65, up from its previous guidance of $15.00 EPS to $15.25 EPS. The revised guidance represents between 16.0% and 17.8% annual earnings growth.
Now, NOC shares did pull back after this earnings announcement, however. That’s because some investors are overreacting to the fact that Northrop Grumman didn’t raise its 2018 cash flow guidance, which currently stands at between $2.0 billion and $2.3 billion. In my opinion, this is just an excuse to take profits, and not a very good one at that.
The fact remains that Northrop Grumman beat analysts’ estimates, and it guided well above the Street’s earnings expectations for 2018. This is a company that has rock solid fundamentals thanks to an extensive portfolio of technologies and capabilities. It also doesn’t hurt that NOC has a solid 1.3% annual dividend yield and a strong track record of dividend increases.
Keeping this in mind, I consider NOC an excellent buy on the dip. And that, folks, is why sometimes a dip is a good thing.