logo
  Join        Login             Stock Quote

Northrop Grumman: Ken Fisher-Style Buy

 March 23, 2012 04:57 PM
 


by John Reese, editor Validea

We select stocks for our portfolio based on finding those that meet the investment criteria of a variety of legendary investors. In this case, Northrop Grumman (NOC) scores a 100% rating on my Kenneth Fisher-based model.

Northrop Grumman provides products, services, and integrated solutions in aerospace, electronics, information and services to its global customers.

The company conducts most of its business with the U.S. Government, principally the Department of Defense (DoD) and intelligence community. It also conducts business with local, state, and foreign governments and commercial customers.

Under my Fisher model, the prospective company should have a low Price/Sales ratio. Non-cyclical (non-Smokestack) companies with Price/Sales ratios below 0.75 are tremendous values and should be sought.

NOC's P/S of 0.59 based on trailing 12 month sales, is below 0.75 which is considered quite attractive. It passes this methodology's P/S ratio test with flying colors.

Less debt equals less risk according to this methodology. NOC's Debt/Equity of 38.20% is acceptable, thus passing the test.

The prospective company should have a low Price/Sales ratio. Non-cyclical(non-Smokestack) companies with Price/Sales ratios below .75 are tremendous values and should be sought.

NOC's P/S ratio of 0.59 is below .75 which is considered extremely attractive. It passes this methodology's P/S ratio test with flying colors.

This methodology also looks for companies that have an inflation adjusted EPS growth rate greater than 15%. NOC's inflation adjusted EPS growth rate of 16.28% passes the test.

This methodology looks for companies that have a positive free cash per share. Companies should have enough free cash available to sustain three years of losses.

This is based on the premise that companies without cash will soon be out of business. NOC's free cash per share of 3.85 passes this criterion.

Finally, this methodology looks for companies that have an average net profit margin of 5% or greater over a three year period. NOC, whose three year net profit margin averages 7.14%, passes this evaluation.
iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageFour Stocks in the Dow Making Fresh 52 Week Lows

“What gets weak tends to get weaker; what gets strong tends to get read on...

article imageGreece And The Cemetery For Your Wealth

The Greek default is merely the opening act of the worst sovereign-debt crisis in history. By the time it read on...

article imageAll Signs Point To Higher Gold Prices

In the face of historic monetary stimulus from nearly every major central bank in the world over the past read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

Is This The Start Of A Correction?
More Articles on: Aerospace



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.