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Northrop Grumman Wins $61M Deal for Embedded GPS and INS

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Northrop Grumman Corp.’s (NOC - Free Report) subsidiary, Northrop Grumman Systems Corp., recently secured a $60.6-million modification deal for the Embedded Global Positioning Systems (GPS) and Inertial Navigation Systems (INS). The contract was awarded by the Air Force Life Cycle Management Center, Robins Air Force Base, Georgia.

Details of the Deal

Per the deal, Northrop Grumman will provide platform integration, modernization, diminishing manufacturing sources, flight test support, technical support services alongside training, engineering support/studies, contractor depot repair, spares, and data for the INS.

Work related to the deal will be performed in Woodland Hills, California, and is expected to be completed by Jun 30, 2019. With this modification, the total cumulative face value of the contract has reached $260.6 million.

What Favors Northrop Grumman?

Northrop Grumman’s Mission Systems unit reported third-quarter 2018 revenues of $2.91 billion that inched up 2.6% year over year. We believe the latest contract along with other notable contracts will further allow this unit to reflect similar solid results in the upcoming quarters.

Due to rising global geo-political tensions in recent times, strengthening a nation’s navigation & positioning by incorporating advanced technologies have become a pivotal requirement. In line with this, Northrop Grumman successfully acquired rocket and missile maker Orbital ATK for $9.2 billion, this June. This buyout will enable Northrop Grumman to benefit from Orbital ATK’S knowledge and expertise in satellites, spacecraft components and commercial space launch systems, and provide competitive offerings in critical global security domains. Such developments, in turn, should boost demand for Northrop’s GPS and INS.

Per Markets and Markets, the INS market is projected to see a CAGR of 5.15% to $12.26 billion by 2022, from 2017. The GPS market, per Grand View Research, is expected to see a CAGR of 18.4% till 2025, from the market valuation of $37.9 billion in 2017. Such impressive projections should benefit Northrop Grumman going ahead, as the company extensively focuses on bringing technological advancements and upgrading its GPS and Navigation Systems.

Price Movement

Shares of Northrop Grumman have declined about 15.2% in a year, against the industry’s growth of 2.9%. The underperformance may have been caused by the intense competition the company faces in both domestic and international markets.


Zacks Rank & Key Picks

Northrop Grumman currently carries a Zacks Rank #3 (Hold).

A few better-ranked companies in the same sector are Aerojet Rocketdyne Holdings . Raytheon Company and The Boeing Company (BA - Free Report) .

While Aerojet Rocketdyne sports a Zacks Rank #1 (Strong Buy), Raytheon and Boeing carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet Rocketdyne came up with average positive earnings surprise of 19.27% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 43.3% to $1.82 in the past 90 days.

Raytheon delivered average positive earnings surprise of 6.71% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 1.7% to $10.10 cents in the past 90 days.

Boeing delivered average positive earnings surprise of 28.01% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 3% to $15.05 in the past 90 days.

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