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Company name Northrop Grumman Corporation
Stock ticker NOC
Live stock price [stckqut]NOC[/stckqut]
P/E compared to competitors Good
MANAGEMENT EXECUTION
Employee productivity Poor
Sales growth Poor
EPS growth Poor
P/E growth Poor
EBIT growth Poor
ANALYSIS
Confident Investor Rating Poor
Target stock price (TWCA growth scenario) $0
Target stock price (averages with growth) $0.49
Target stock price (averages with no growth) $2.55
Target stock price (manual assumptions) $51.19

The following company description is from Google Finance: http://www.google.com/finance?q=noc
Northrop Grumman Corporation (Northrop Grumman) is an integrated enterprise consisting of businesses that cover the entire security spectrum, from undersea to outer space and into cyberspace. The Company operates in five segments: Aerospace Systems, Electronic Systems, Information Systems, Shipbuilding and Technical Services. In April 2009, the Company acquired Sonoma Photonics, Inc., as well as assets from Swift Engineering?s Killer Bee Unmanned Air Systems product line. In December 2009, it sold its Advisory Services Division (ASD). In January 2009, Northrop Grumman streamlined its organizational structure by reducing the number of reporting segments from seven to five.


Confident Investor comments: There are few companies that can put up this much red on the Confident Investor chart. At this price and at this time, I do not think that a Confident Investor can confidently invest in this stock.


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Now that BHP [stckqut]BHP[/stckqut] has given up their efforts to acquire Potash [stckqut]POT[/stckqut], I am returning Potash to my Watch List. Potash never stopped being a Good Company but it was difficult to be confident in an investment in the company with BHP in the hunt.

From BHP’s website:

15 November 2010
BHP Billiton (ASX:BHP/LSE:BLT/NYSE:BHP and BBL/JSE:BIL) today announced that it has withdrawn its offer to acquire all of the issued and outstanding common shares of Potash Corporation of Saskatchewan Inc. (“PotashCorp”) (NYSE:POT/TSX:POT) (the “Offer”).

BHP Billiton has determined that the condition of its Offer relating to receipt of a net benefit determination by the Minister of Industry under the Investment Canada Act cannot be satisfied, and accordingly, the Offer has been withdrawn. A total PotashCorp-related transaction cost of approximately US$350 million, of which approximately US$250 million related to the US$45 billion acquisition financing facility, will be recognised as an exceptional item in the December 2010 interim accounts.

BHP Billiton continues to believe its Offer would have resulted in a significant net benefit to Canada, Saskatchewan and New Brunswick. As a package, the proposed undertakings offered by BHP Billiton in a signed, written submission to the Minister of Industry were unparalleled in substance, scope and duration, reflecting the importance of potash to Canada and Saskatchewan. The company had offered to commit to legally-binding undertakings that would have, among other things, increased employment, guaranteed investment and established the company’s global potash headquarters in Saskatoon, Saskatchewan.

The investment commitment included US$450 million on exploration and development over the next five years over and above commitments to spending on the Jansen project. An additional US$370 million would have been spent on infrastructure funds in Saskatchewan and New Brunswick. BHP Billiton would also have applied for a listing on the Toronto Stock Exchange.

In addition, BHP Billiton was prepared to make a unique commitment to forego tax benefits to which it was legally entitled and, as a condition of the Minister’s approval, BHP Billiton was prepared to remain a member of Canpotex for five years. Both of these undertakings were intended to allay any concerns the Province of Saskatchewan may have had regarding potential losses in revenues.

Further, to give the company an even stronger Canadian presence, BHP Billiton undertook to relocate to Saskatchewan and Vancouver over 200 additional jobs from outside Canada. BHP Billiton would have maintained operating employment at PotashCorp’s Canadian mines at current levels for five years and would have increased overall employment at the combined Canadian potash businesses by 15% over the same period. BHP Billiton also made a number of additional undertakings in relation to Saskatchewanian and Canadian participation in senior management roles within the combined potash business, within a new Potash Advisory Board and also on the Board of BHP Billiton.

Local suppliers would have been guaranteed a full and fair opportunity to provide goods and services and BHP Billiton undertook to spend at least US$8 million per annum on community programs, primarily in Saskatchewan and New Brunswick, while raising overall community spending from PotashCorp’s current levels to BHP Billiton’s levels. BHP Billiton also offered to invest in the University of Saskatchewan to create a Mining Centre of Excellence to enhance the province’s mining capabilities and to raise the international profile of both the University and the province.

BHP Billiton was prepared to accept an unprecedented monitoring and compliance regime that would have provided the Government with additional assurances that the undertakings would be complied with, including making available a US$250 million performance bond.

During the investment review process, BHP Billiton engaged extensively with officials from the Investment Review Division of Industry Canada. In view of the reasons underlying the Minister’s interim decision of November 3, the company believes that the Minister of Industry would have required additional undertakings beyond those BHP Billiton had already offered which would have conflicted with BHP Billiton’s business strategy and been counter to creating shareholder value. BHP Billiton Chief Executive Officer Marius Kloppers expressed disappointment at the outcome while emphasising the company’s commitment to Canada and disciplined approach to shareholder value.

“Unfortunately, despite having received all required anti-trust clearances for the Offer, we have not been able to obtain clearance under the Investment Canada Act and have accordingly decided to withdraw the Offer. We remain committed to Canada and we plan to develop a significant presence in the potash industry in Saskatchewan. As part of those plans we will continue to progress our Jansen Project and other development opportunities,” he said.

“Our core business strategy of diversifying our investments across geographies and commodities differentiates us and, more importantly, continues to deliver value to our shareholders and the communities and countries where we operate. We have an unparalleled portfolio of tier one assets, which we believe can sustain decades of increased production. We plan to invest US$15 billion in our global business this financial year and expect our ongoing capital commitment to continue to deliver robust production growth,” Mr Kloppers added.

BHP Billiton also announced its intention to continue the company’s strong track record of returning excess capital to shareholders by reactivating the remaining US$4.2 billion component of its previously suspended US$13.0 billion buy-back program.

BHP Billiton Chairman Jac Nasser said: “The decision to reactivate the buy-back program is entirely consistent with our commitment to maintain an appropriate capital structure while we continue to make substantial investments in our growth projects. BHP Billiton has a strong track record of returning capital to shareholders. From 2005, BHP Billiton has completed buy-backs totalling US$12.7 billion or 11% of issued capital, and has also paid out US$17.9 billion in dividends.”

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Do you want to retire in luxury or do you want to work as a greeter in Wal-Mart in your retirement?

Let’s be perfectly blunt. We all admire and respect the elderly person that is a greeter at Wal-Mart or taking your order at McDonald’s. We typically think this is a good thing as these people are still active and they are still able to do some work to have a living. Hurray for them. However, aren’t we a little more envious of the retired gentleman that is playing golf 4 times a week?

Don’t we look at the candy-striper in the hospital that is volunteering time to wheel new mothers to their cars and think that they are having a very fulfilling retirement. They aren’t there to make money – they are volunteering their time. When they are done, they are having a nice lunch with their friends and playing golf, tennis, or bridge later in the day at the club. These people did the right things during their working years to allow themselves to be in a position to retire in luxury and afford their leisure time.

When you go into the store next time and see the elderly person helping you, think about their life. Sure, they are probably having a rewarding time. Sure, it allows them to be busy and not staring at the four walls of their bedroom. But, don’t you think they would rather be volunteering at their church or the local museum or hospital rather than WORKING? Don’t you think they would rather be enjoying a recreational activity with their friends instead of WORKING?

Do you want to spend your retirement years WORKING at an hourly job or enjoying the leisure years of your life in luxury?

This is not a last minute desperation attempt to overcome years of not planning. If you are going to retire next year, don’t waste your time on this whitepaper. Instead, this is a practical first step primer on what you need to do a decade or two before you need the money.

This 25 page whitepaper is designed to give you some basic guidance on the first basic questions that you should be asking.

The secret to a retiring in luxury is to realize three main facts:

  1. You are going to live longer than you thought you would
  2. You need more money than you think to retire in luxury
  3. Most mutual funds don’t earn enough to really beat inflation

It is important to understand that I am not suggesting you will retire with wealth. I am not suggesting that you will be able to own a mansion on beach, a ski chalet in the mountains, and a condo in downtown New York with a private jet and a Bentley to assist you in your roaming. This is a goal that is simply out of reach for most people unless they are already wealthy.

Retiring in a luxury lifestyle means:

  • Enjoying the best the world has to offer. When you travel you get to fly in first class. You stay in the best five-star hotels.
  • The car that you drive is no more than a few years old. It is equipped with all of the safety and creature comforts that you could want in a car.
  • If your interests include golf or tennis, then you belong to a private club. Regardless, of your interest in an athletic hobby, you belong to the finest health club to keep you fit and happy.
  • Fine dining is a must. There are many restaurants with the world’s greatest chefs creating amazing meals.
  • A beautiful luxury dream home to relax in is a wonderful reward for all the long hours and hard work. This will allow you to host parties for friends and family.
  • Looking your best so that you turn heads when you walk down the street is a great boost to your self-esteem; so knowing the best women fashion designers and the best men’s stylists is important.
  • Having relationships are important especially when celebrating success. Sharing life with loved ones makes life worth living.
  • Personal development is very important. Working on your spiritual side to be your best and helping others do the same is another of life’s great rewards. This includes charity work.

This whitepaper is completely free. I am not going to try to sell you anything. I could have written the information in this whitepaper as a series of posts on this website but then it would have been too long. Plus, by giving it to you as a document, I can easily include tables and charts for you to investigate. When you register for the paper, I will sent you an email that will allow you to download the whitepaper in the format that is easiest for you (as a PDF or as an ebook for your Kindle or iPad).

Your data is safe. I will not sell or lend your information to ANYONE else. I hope that the whitepaper that I am about to send you will help you make the correct first actions that will allow you to Retire In Luxury.

All you have to do to receive this absolutely free and no strings attached whitepaper is fill out this quick form and I will send you the download link.

So what’s the catch????

Really, there isn’t one. The only time I am going to use your name and email address again is when one of my books is published (hopefully soon – the publishing process is a bit long and cumbersome). At that time, I will send you a notice of my book, what it is about, and how to get it. I may publish other whitepapers in the future so I will send you an email to see if you want those as well. At anytime that I send you an email, it will include a link to be taken off of my list.

Sign up for Retire In Luxury whitepaper.

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On:

Do you want to retire in luxury or do you want to work as a greeter in Wal-Mart in your retirement?

Let’s be perfectly blunt. We all admire and respect the elderly person that is a greeter at Wal-Mart or taking your order at McDonald’s. We typically think this is a good thing as these people are still active and they are still able to do some work to have a living. Hurray for them. However, aren’t we a little more envious of the retired gentleman that is playing golf 4 times a week?

Don’t we look at the candy-striper in the hospital that is volunteering time to wheel new mothers to their cars and think that they are having a very fulfilling retirement. They aren’t there to make money – they are volunteering their time. When they are done, they are having a nice lunch with their friends and playing golf, tennis, or bridge later in the day at the club. These people did the right things during their working years to allow themselves to be in a position to retire in luxury and afford their leisure time.

When you go into the store next time and see the elderly person helping you, think about their life. Sure, they are probably having a rewarding time. Sure, it allows them to be busy and not staring at the four walls of their bedroom. But, don’t you think they would rather be volunteering at their church or the local museum or hospital rather than WORKING? Don’t you think they would rather be enjoying a recreational activity with their friends instead of WORKING?

Do you want to spend your retirement years WORKING at an hourly job or enjoying the leisure years of your life in luxury?

This is not a last minute desperation attempt to overcome years of not planning. If you are going to retire next year, don’t waste your time on this whitepaper. Instead, this is a practical first step primer on what you need to do a decade or two before you need the money.

This 25 page whitepaper is designed to give you some basic guidance on the first basic questions that you should be asking.

The secret to a retiring in luxury is to realize three main facts:

  1. You are going to live longer than you thought you would
  2. You need more money than you think to retire in luxury
  3. Most mutual funds don’t earn enough to really beat inflation

Sign up for Retire In Luxury whitepaper.

It is important to understand that I am not suggesting you will retire with wealth. I am not suggesting that you will be able to own a mansion on beach, a ski chalet in the mountains, and a condo in downtown New York with a private jet and a Bentley to assist you in your roaming. This is a goal that is simply out of reach for most people unless they are already wealthy.

Retiring in a luxury lifestyle means:

  • Enjoying the best the world has to offer. When you travel you get to fly in first class. You stay in the best five-star hotels.
  • The car that you drive is no more than a few years old. It is equipped with all of the safety and creature comforts that you could want in a car.
  • If your interests include golf or tennis, then you belong to a private club. Regardless, of your interest in an athletic hobby, you belong to the finest health club to keep you fit and happy.
  • Fine dining is a must. There are many restaurants with the world’s greatest chefs creating amazing meals.
  • A beautiful luxury dream home to relax in is a wonderful reward for all the long hours and hard work. This will allow you to host parties for friends and family.
  • Looking your best so that you turn heads when you walk down the street is a great boost to your self-esteem; so knowing the best women fashion designers and the best men’s stylists is important.
  • Having relationships are important especially when celebrating success. Sharing life with loved ones makes life worth living.
  • Personal development is very important. Working on your spiritual side to be your best and helping others do the same is another of life’s great rewards. This includes charity work.

This whitepaper is completely free. I am not going to try to sell you anything. I could have written the information in this whitepaper as a series of posts on this website but then it would have been too long. Plus, by giving it to you as a document, I can easily include tables and charts for you to investigate. When you register for the paper, I will sent you an email that will allow you to download the whitepaper in the format that is easiest for you (as a PDF or as an ebook for your Kindle or iPad).

Your data is safe. I will not sell or lend your information to ANYONE else. I hope that the whitepaper that I am about to send you will help you make the correct first actions that will allow you to Retire In Luxury.

All you have to do to receive this absolutely free and no strings attached whitepaper is fill out this quick form and I will send you the download link.

Sign up for Retire In Luxury whitepaper.

So what’s the catch????

Really, there isn’t one. The only time I am going to use your name and email address again is when one of my books is published (hopefully soon – the publishing process is a bit long and cumbersome). At that time, I will send you a notice of my book, what it is about, and how to get it. I may publish other whitepapers in the future so I will send you an email to see if you want those as well. At anytime that I send you an email, it will include a link to be taken off of my list.

Sign up for Retire In Luxury whitepaper.

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Earlier, I spoke about the earning estimates of the “experts” and that, at least in the case of Target [stckqut]TGT[/stckqut], the numbers didn’t make sense for a 5-year projection of their earnings growth.

Let’s dig in a bit deeper. We will stay with MSN Money (I am not beating up MSN Money – it is simply reporting data supplied by others – you can find the same numbers at Morningstar or probably your favorite broker’s website). A few items below Earnings Estimates, you will see Financial Results and then Statements will appear and it will show a page that includes a tab for 10 Year Summary.

Let’s compare Sales over the last 10 years to Earning before Interest and Taxes (EBIT). We can quickly calculate that Earnings has varied from about 5.5% to 7.5% and averages about 6.3%. We can also see that for the last couple years, Target has been a bit below average on its Earnings compared to Sales (5.92% for last year).

Earlier, we saw that the analysts are saying the company is going to increase earning 12% per year for the next five years. That would mean that either Sales are going to increase at 12% (something that when you look at the Sales column hasn’t happened in the last 3 years) OR the earnings/sales would have to increase very dramatically – something that also has not happened in the past.

My prediction is that Target will not grow earnings at greater than 12% per year for the next 5 years. The evidence of the company to pull off that level of performance is simply not available.

A quick side note – why do I care about earnings growth? Simple, earnings growth should result in a higher stock price meaning my investment in the company will continue to appreciate. The growth of one company compared to another company is a major factor in my decision to invest my hard-earned capital in any given company. I want to maximize my rate of growth of my investment – don’t you?

P.S. Tomorrow, I will post my analysis on Target Corporation. Sorry to use them as my whipping boy for this commentary.