Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Northrop Grumman Corporation (NOC - Analyst Report) has received a total of three contracts − two modifications and one fresh − from the U.S. Department of Defense (DoD). The total deal was valued at $55.5 million.

Under the first modification contract, worth $24.5 million, the company will boost the ceiling value on a previously awarded cost-plus-incentive-fee, firm-fixed-price Ground/Air Task-Oriented Radar (G/ATOR) Engineering contract from the U.S. Marine Corps. This is mainly intended to cover the expected rise in costs and pay for the manufacturing development phase. Of the total amount, $21.1 million is allotted for the engineering and manufacturing development phase, while the remaining $3.4 million for production engineering support.

G/ATOR is a new mobile, three-dimensional, short-to-medium-range tactical radar system being developed by the U.S. Marine Corps. It is intended to provide the Marines with improved capabilities to detect, track, and provide target quality data to engage hostile aircraft, cruise missiles, unmanned air vehicles, rockets, mortars, and artillery. It will also provide dynamic air traffic control capabilities to increase the safety of Marine Corps air operations. Northrop's work on this phase of the contract is expected to be completed by Apr 25, 2014.

The second modification contract calls for Northrop to supply engineering and production planning services for mission packages that will be deployed from and integrated with the littoral combat ship. This $19.4 million worth modification contract is slated to be completed by the middle of next year.

The company won an $11.6 million new fixed-price indefinite-delivery/indefinite-quantity (IDIQ) contract in order to manufacture, test, integrate, qualify and deliver an improved version of laser configuration. This is to be used in the Electro-Optical Third Generation Console for Advanced Targeting Forward Looking Infrared (FLIR) systems. This system will be installed on the U.S. Navy’s F/A-18 E/F fighter jets and SH-60 Seahawk helicopters. Initially Northrop will provide the Navy with two prototype units of the upgraded laser and subsequently it will supply 102 upgraded units for installation. Work is expected to be wrapped up by Jun 2016.

Northrop has a long-standing business association with the U.S. defense establishments. The company is flooded with a number of contracts from several government establishments. It had a total backlog of $39.4 billion at the end of first-quarter 2013. In May 2013, Northrop won a contract, worth $555.6 million, from the DoD to upgrade the Global Hawk.

The company’s backlog will likely see further upside in the near future through its strong focus areas of cyber security, modernization of defense and homeland security assets, intelligence, surveillance and reconnaissance systems, advanced electronics and software development. Additionally, the proposed 25% increase in Northrop’s funding in the 2014 budget would encourage future opportunities.

Northrop currently has a Zacks Rank #2 (Buy). Other stocks in the sector that also appear promising include Erickson Air-Crane Inc. (EAC - Snapshot Report), The Boeing Company (BA - Analyst Report) and Wesco Aircraft Holdings, Inc. (WAIR - Snapshot Report). While Erickson retains a Zacks Rank #1 (Strong Buy), Boeing and Wesco Aircraft carry a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
VERTEX ENERG VTNR 8.25 +10.59%
MODINE MANUF MOD 17.12 +8.77%
CLAYTON WILL CWEI 140.03 +7.27%
E*TRADE FINA ETFC 22.67 +5.44%
KNIGHTSBRIDG VLCCF 13.22 +5.42%