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Northrop (NOC) Wins $35M Deal to Support E-2D Hawkeye Jet
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Defense giant Northrop Grumman Corp.’s (NOC - Free Report) business unit, Military Aircraft Systems, recently won a delivery order against a previously issued basic ordering agreement from the Naval Air Systems Command, Patuxent River, MD. The previous order mandated incorporation of a flight management system into the E-2D Advanced Hawkeye aircraft.
The contract is valued at $34.5 million. Per the terms of the new contract, Northrop will integrate, install, test and certify the flight management system. Work will be carried out in Woodland Hills, CA and Melbourne, FL. The company will utilize fiscal 2015 aircraft procurement (Navy) funds to complete the work by Sep 2020.
A Brief Note on Hawkeye Aircraft
Hawkeye is an airborne, all-weather, tactical, early-warning aircraft used by the Navy. E-2D is the fourth version of the E-2 Hawkeye. The technology and gadgets fitted in this aircraft increase its visibility on targets far away. E-2D Advanced Hawkeye has a structurally distinctive design – a rotating rotodome and four vertical stabilizer tail configurations that provide 360-degree surveillance at all times.
Northrop is also supported by other industry leaders on this program. Lockheed Martin Corp.’s (LMT - Free Report) unit, Lockheed Martin Naval Electronics and Surveillance Systems, supplies the principal AN/APY-9 radar system. On the other hand, L-3 Technologies Inc.’s unit supplies the ultra-high frequency electronically scanned array antenna for the Hawkeye. Meanwhile, Raytheon Company’s Space and Airborne Systems provides the T-56-A engines.
The Hawkeye jets, which have been used for several purposes like surveillance and missile tracking, has proved itself indispensable to the Navy in recent times.
Our View
In the light of rising security threats due to growing terrorism, the U.S. government has taken initiatives especially in the Intelligence, Surveillance, and Reconnaissance (ISR) field. In this regard, the administration included $1.2 billion in the fiscal 2017 budget and made an allotment of $4.5 billion over the Future Years Defense Program (FYDP) to expandISRsupport for counterterrorism.
Naturally, this has inspired other countries, who have realized the urgent need for ISR technologies, to follow suit. This is likely to immensely benefit Northrop. The company boasts a strong focus on strengthening its ISR wing, which has helped it maintain a stable earnings stream based on the changing needs of the defense landscape.
To further expand its ISR capabilities, Northrop has lately engaged in improving the features of its Triton unmanned aircraft system (UAS). The UAS has recently completed formal lab testing and a successful first flight of an improved software suite. This should enable Triton's early operational capability deployment in the Pacific next year.
Further, the company successfully flight tested the MS-177 multi-spectral imaging payload on Global Hawk UAS, further expanding its mission capability. This is the first time the sensor has been flown in a high altitude, long range autonomous aircraft. It represents a new benchmark in imaging ISR sensors. We believe that these recent developments will further demonstrate the value of Northrop’s ISR capabilities in front of both the U.S. government and international customers. This, in turn, will allow the company to win more notable contracts like the recent delivery order, in the days ahead.
Price Movement
Northrop’s stock has returned 18.1% in the last one year, underperforming the Zacks categorized Aerospace–Defense industry’s gain of 30.9%. This could be because higher operating expenses continue to partially impact the company’s profit margin. Moreover, in a highly competitive environment, customers might get attracted to similar products offered by its peers at a lower price, which remains a major concern.
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Northrop (NOC) Wins $35M Deal to Support E-2D Hawkeye Jet
Defense giant Northrop Grumman Corp.’s (NOC - Free Report) business unit, Military Aircraft Systems, recently won a delivery order against a previously issued basic ordering agreement from the Naval Air Systems Command, Patuxent River, MD. The previous order mandated incorporation of a flight management system into the E-2D Advanced Hawkeye aircraft.
The contract is valued at $34.5 million. Per the terms of the new contract, Northrop will integrate, install, test and certify the flight management system. Work will be carried out in Woodland Hills, CA and Melbourne, FL. The company will utilize fiscal 2015 aircraft procurement (Navy) funds to complete the work by Sep 2020.
A Brief Note on Hawkeye Aircraft
Hawkeye is an airborne, all-weather, tactical, early-warning aircraft used by the Navy. E-2D is the fourth version of the E-2 Hawkeye. The technology and gadgets fitted in this aircraft increase its visibility on targets far away. E-2D Advanced Hawkeye has a structurally distinctive design – a rotating rotodome and four vertical stabilizer tail configurations that provide 360-degree surveillance at all times.
Northrop is also supported by other industry leaders on this program. Lockheed Martin Corp.’s (LMT - Free Report) unit, Lockheed Martin Naval Electronics and Surveillance Systems, supplies the principal AN/APY-9 radar system. On the other hand, L-3 Technologies Inc.’s unit supplies the ultra-high frequency electronically scanned array antenna for the Hawkeye. Meanwhile, Raytheon Company’s Space and Airborne Systems provides the T-56-A engines.
The Hawkeye jets, which have been used for several purposes like surveillance and missile tracking, has proved itself indispensable to the Navy in recent times.
Our View
In the light of rising security threats due to growing terrorism, the U.S. government has taken initiatives especially in the Intelligence, Surveillance, and Reconnaissance (ISR) field. In this regard, the administration included $1.2 billion in the fiscal 2017 budget and made an allotment of $4.5 billion over the Future Years Defense Program (FYDP) to expandISRsupport for counterterrorism.
Naturally, this has inspired other countries, who have realized the urgent need for ISR technologies, to follow suit. This is likely to immensely benefit Northrop. The company boasts a strong focus on strengthening its ISR wing, which has helped it maintain a stable earnings stream based on the changing needs of the defense landscape.
To further expand its ISR capabilities, Northrop has lately engaged in improving the features of its Triton unmanned aircraft system (UAS). The UAS has recently completed formal lab testing and a successful first flight of an improved software suite. This should enable Triton's early operational capability deployment in the Pacific next year.
Further, the company successfully flight tested the MS-177 multi-spectral imaging payload on Global Hawk UAS, further expanding its mission capability. This is the first time the sensor has been flown in a high altitude, long range autonomous aircraft. It represents a new benchmark in imaging ISR sensors. We believe that these recent developments will further demonstrate the value of Northrop’s ISR capabilities in front of both the U.S. government and international customers. This, in turn, will allow the company to win more notable contracts like the recent delivery order, in the days ahead.
Price Movement
Northrop’s stock has returned 18.1% in the last one year, underperforming the Zacks categorized Aerospace–Defense industry’s gain of 30.9%. This could be because higher operating expenses continue to partially impact the company’s profit margin. Moreover, in a highly competitive environment, customers might get attracted to similar products offered by its peers at a lower price, which remains a major concern.
Zacks Rank
Northrop currently holds a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>