Yahoo Finance Northrop (NOC) Wins $46.7 Deal to Support Littoral Combat Ships
Northrop Grumman Corporation NOC recently clinched a modification contract to support the Littoral Combat Ship. Valued at $46.7 million, the contract is projected to be complete by March 2024.
Details of the Deal
The modification contract was awarded by the Naval Air Systems Command, Washington, D.C. Per the terms of the deal, Northrop will provide engineering and sustainment support for the Littoral Combat Ship mission module.
The work related to the deal will be carried out at multiple locations across the United States and reach fruition by March 2026 if all options are exercised.
What’s Favoring Northrop Grumman?
To safeguard their borders from hostile attacks amid worldwide geopolitical instability, nations have been rapidly increasing their defense spending. Investments in sea warfare capabilities for both defensive and offensive proposes have significantly gained traction.
Littoral combat ships play a critical role in defending a nation. These are designed as agile, mission-focused platforms capable of operating in near-shore and open-ocean environments.
Per a report from the Mordor Intelligence firm, the global naval combat system market is likely to witness a CAGR of more than 2.5% during the 2023-2028 period. This is likely to benefit NOC, considering its multi-domain maritime capabilities that enable current and future maritime missions.
The company delivers components like Airborne LASER Mine Detection System, Fire Scout and bridge and navigation systems for both the Freedom and Independence variants of littoral combat ships.
Considering the market’s growth prospects and Northrop’s expertise in providing various support services for military ships, the company may witness a significant order flow, like the latest one. This will continue to boost its revenue generation prospects.
Peer Prospects
Other defense companies that may enjoy the perks of the expanding naval combat system market are as follows:
Huntington Ingalls Industries, Inc. HII: It is known for specializing in manufacturing amphibious assault and expeditionary ships. The company provides more than 70% of ships for the U.S. Navy.
The Zacks Consensus Estimate for Huntington Ingalls’ 2023 earnings implies a growth rate of 0.3% from the prior-year reported figure. The Zacks Consensus Estimate for HII’s 2023 sales calls for a growth rate of 3.5% from the prior-year reported figure.
General Dynamics GD: Its Marine Systems segment is the leading designer and builder of nuclear-powered submarines and surface combatant ships. It also provides maintenance, modernization and lifecycle support services for Navy ships.
General Dynamics has a long-term earnings growth rate of 8.9%. GD shares have rallied 2.3% in the past three months.
BAE Systems plc BAESY: BAE Systems’ Maritime unit designs and manufactures naval ships and submarines, as well as state-of-the-art combat systems and equipment. The company also provides maintenance and modernization programs to support ships and equipment in service worldwide.
BAE Systems boasts a long-term earnings growth rate of 14%. Shares of BAE Systems have appreciated 42.2% in the past year.
Price Movement
In the past month, shares of Northrop Grumman have decreased 1.5% compared with the industry’s decline of 5.9%.
Image Source: Zacks Investment Research
Zacks Rank
Northrop Grumman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
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