Yahoo Finance Northrop (NOC) Wins Contract to Support E-2D Hawkeye Jets
Northrop Grumman Corp.’s NOC business unit, Northrop Grumman Systems, recently clinched a contract involving its E-2D Advanced Hawkeye jets. The award has been provided by the Naval Air Systems Command, Patuxent River, MD.
Details of the Deal
Valued at $13.9 million, the contract is expected to be completed by June 2026. Per the terms of the deal, Northrop will manufacture and supply 12 motor controllers, 13 n-voice and data recorders, and 12 standard automatic flight control systems. These equipment will be provided to aid production efforts for E-2D Advanced Hawkeye aircraft.
Work related to this deal will be carried out in Grand Rapids, MI; Los Angeles, CA; and Endicott, NY.
What’s Favoring Northrop?
Nations across the globe are reinforcing their military capabilities to strengthen their defense structure in the growing threat environment worldwide. In this context, military aircraft that play a critical role in military missions have also been witnessing a significant rise in demand. This, in turn, has been ushering in solid order flows for major combat aircraft manufacturers like Northrop.
To this end, it is imperative to mention that Northrop’s E-2D Hawkeye aircraft boasts battle management, theater air, missile defense and multiple sensor fusion capabilities in an airborne system. These provide the warfighter with expanded battlespace awareness, especially in the area of information operations.
Through its effective radar sensor and robust network-enabled capability, the Advanced Hawkeye aircraft provides critical, actionable data to joint forces and first responders.
Such features of the aircraft make it an attractive choice for the military, resulting in NOC winning multiple orders for the same, like the latest one. Such orders are likely to boost Northrop’s revenue generation prospects in the military aircraft business arena.
NOC’s Growth Prospects
Factors like increasing defense spending by developed nations, rising defense investment from emerging economies, rapidly rising geopolitical tensions worldwide like the ongoing hostility in the Middle East, and the rising incorporation of technology to elevate both the quality and efficiency of the new-age military jets have been bolstering the growth prospects of the combat jet market.
This must have prompted the Morder Intelligence firm to project a CAGR of 3.7% for the global fighter aircraft market in the 2024-2029 period. Such growth prospects should benefit Northrop as its product portfolio offers a wide range of manned and unmanned aircraft that already enjoys an established position in the military aviation market.
Since the 1930s, the company has been offering varied manned aircraft solutions to global customers worldwide. These solutions range from fighter jets and stealth bombers to surveillance and electronic warfare. Notably, apart from E-2D, NOC builds the B-2 Spirit Stealth Bomber jet, which is the only long-range penetrating stealth bomber in the U.S. arsenal. Among unmanned air solutions, its MQ-4C Triton deserves a special mention because it provides real-time intelligence, surveillance, reconnaissance and targeting (ISR&T) over vast ocean and coastal regions.
Opportunities for Peers
The abounding growth prospects of the military aviation market should also benefit other defense majors like Lockheed Martin LMT, Boeing BA and Textron TXT that manufacture combat jets.
Lockheed Martin’s Aeronautics segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of advanced military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies. Its major programs include the F-35 Lightning II Joint Strike Fighter jet, the C-130 Hercules airlifter, the F-16 Fighting Falcon jet and the F-22 Raptor jet.
LMT’s long-term earnings growth rate is 4.1%. Shares of LMT have returned 7% to its investors in the past year.
Boeing’s Defense, Space & Security segment’s primary products include fixed-wing military aircraft, F/A-18E/F Super Hornet, F-15 programs, P-8 programs, KC-46A Tanker and T-7A Red Hawk. The segment also manufactures rotorcraft and rotary-wing programs, such as CH-47 Chinook, AH-64 Apache and V-22 Osprey.
Boeing’s long-term earnings growth rate is 25.5%. The stock boasts a four-quarter average earnings surprise of 17.83%.
Textron’s business unit, Textron Aviation Defense, designs, builds and supports versatile and globally known military aircraft preferred for training and attack missions. Some of Textron’s renowned products include the Beechcraft T-6C trainer and the AT-6 Wolverine.
The company boasts a long-term earnings growth rate of 10.1%. The Zacks Consensus Estimate for its 2024 sales indicates growth of 5.6% from the previous year’s reported number.
Price Movement
In the past year, shares of Northrop have lost 2.3% compared with the industry’s 7.8% decline.
Image Source: Zacks Investment Research
Zacks Rank
Northrop 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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