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On Jul 15, 2013, shares of Northrop Grumman Corp. (NOC - Free Report) hit a new 52-week high of $88.63 on the back of a series of contracts received from the U.S. Department of Defense (DoD) and from its foreign clients. The company registered positive earnings surprises in the last four quarters, leading to an average beat of 10.9%.

Northrop’s diligent efforts to develop cutting edge defense technologies and bringing innovative products and services to the market have enabled the company to clinch profitable contracts all along. This is evident from the latest string of contract wins which comprised mostly of maintenance, support and upgrade services.

The largest contract received by Northrop in recent times was the $490.0 million follow-on order from the U.S. Air Force to support interoperability of dissimilar training systems. In addition, the company secured a $32.3 million contract for the delivery of spare parts to support five E-2D Advanced Hawkeye Full Rate Production Lot 1 Aircraft.

Northrop also clinched a number of foreign military sales (FMS) contracts. The company received a $115.0 million FMS contract for offering the latest generation of F-16 targeting radar6 AN/APG-68 (V) 9 multimode fire control radar systems to the Royal Thai Air Force and 22 units to the Republic of Iraq. This also included providing auxiliary parts to the military forces of Egypt, Pakistan and Morocco.

The present valuation makes the shares of Northrop look attractive. The forward price/earnings (“P/E”) multiple of 12.3x is lower than the peer group average of 14.9x, reflecting a discount of 17.5%. In addition, the trailing twelve-month inventory turnover of the company is 25.61, significantly higher than the peer group average of 6.7. The expected long-term earnings growth rate for the company is set at 6.8%.

Northrop currently holds a Zacks Rank #2 (Buy). Other companies in the industry worth considering are Zacks Ranked #1 (Strong Buy) The Boeing Company (BA - Free Report) and Zacks Ranked # 2 Embraer SA (ERJ - Free Report) and GenCorp Inc. .

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