Northrop Grumman lands healthy returns for its investors
Northrop Grumman: International defense needs rescue 2014 returns (Part 8 of 9)
Stock value growth
Northrop Grumman (NOC) generated healthy stock returns for its investors last year. The company generated about 40% returns over the period, more than double the index (SPY) returns in that time frame. The industrial sector forms 11% of the SPDR S&P 500 ETF (SPY).
If we look at the stock performance over the long term as well, the company’s returns have been exceptionally high. NOC’s stock value has grown by about 170% over the last decade. In comparison, the index grew by about 75% during that time frame. Even during the recession, the company was able to maintain its value relative to the index.
NOC’s PE (price-to-earnings) ratio stands at 16.7. This is lower than its competitors Lockheed Martin (LMT), General Dynamics (GD), and Boeing (BA), which all have PE ratios above 19. This makes NOC a lucrative bet for the future since it has room to grow.
Dividend payout and share repurchase
Apart from its stock value growth, the company has ensured it pays consistent dividends to its investors. NOC paid its shareholders $563 million in dividends in 2014. In fact, over the last five years, the annual dividend per share has grown by 60%.
The company aims to repurchase 60 million shares by the end of fiscal 2015 to enhance its shareholder value. So far this year, it has repurchased 42.2 million shares, or approximately 70%. NOC plans to continue with the repurchase next year in a thoughtful manner, creating maximum value for its shareholders. In 2014, total shareholder return totaled about 31.4%.
Overall, the company is a very healthy source of shareholder returns, generating robust rewards for its investors.
Browse this series on Market Realist:
