Back to top

Image: Bigstock

Northrop Grumman's Unit Wins $3.6B Deal for LAIRCM Equipment

Read MoreHide Full Article

Northrop Grumman Corp.’s (NOC - Free Report) business unit, Northrop Grumman Systems Corp., recently secured a $3.6-billion contract for delivering Large Aircraft Infrared Counter Measures (LAIRCM) equipment and related support. The contract was awarded by the Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, Ohio.

Per the terms, Northrop Grumman will provide LAIRCM line replaceable units, support equipment, logistics support, systems and sustaining engineering, program management, and other technical services. Work related to the deal will be executed in Rolling Meadows, IL and is scheduled to get completed by December 2025.

A Brief Note on LAIRCM System

The LAIRCM system is an active countermeasure that can automatically detect a missile launch. On identifying a missile, LAIRCM determines if it is a threat and activates a high-intensity, laser-based countermeasure system to track and destroy the missile on its own with no action required by the crew. The primary purpose of the LAIRCM program is to protect large aircraft from man-portable missiles.

What Favors Northrop Grumman?    

Northrop Grumman’s LAIRCM system has consistently been reinforced with new technologies that help neutralize increasing threats. It lowers the overall handling costs for the U.S. Department of Defense. This benefits the company in acquiring major contracts related to this system and bolstering profit margin.

Further, the latest buyout of rocket and missile maker Orbital ATK for $9.2 billion has enabled Northrop Grumman to enhance its product portfolio and capability in manufacturing technologically-advanced combat platforms. Using Orbital ATK’s combat-proven expertise in missile manufacturing, Northrop Grumman can be expected to further strengthen its existing missile products like the LAIRCM, and innovate many more.

In the missile space, Northrop Grumman has been consistently witnessing strong demand for its products on a global scale with programs like F-35, Triton and SABR radar, Global Hawk and a solid set of new programs. To this end, in June, the Australian government announced its commitment to purchase Northrop Grumman’s Triton drones worth approximately $5.1 billion. Such contract wins should enable the company to improve its top line, going forward.

Price Performance

Shares of Northrop Grumman have declined about 16.4% over a year compared with the industry’s fall of 6%. The underperformance may have been caused by the intense competition the company faces in both domestic and international markets.



Zacks Rank & Stocks to Consider

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

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

While Aerojet Rocketdyne and Teledyne Technologies sport a Zacks Rank #1 (Strong Buy), Boeing carries 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.

Teledyne Technologies came up with average positive earnings surprise of 12.92% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 6% to $8.75 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.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

The Boeing Company (BA) - free report >>

Northrop Grumman Corporation (NOC) - free report >>

Teledyne Technologies Incorporated (TDY) - free report >>

Published in