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Northrop Wins $86M Deal to Support Starlite Radar System

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Northrop Grumman Corp.’s (NOC - Free Report) business unit, Northrop Grumman Systems Corp., recently secured an $86.2-million contract for supporting Starlite system. The contract was awarded by the U.S. Army Contracting Command, Aberdeen Proving Ground, Maryland. Work related to the deal is scheduled to complete by Jan 31, 2023.

A Brief Note on Starlite System

Northrop Grumman's Starlite system is a small, lightweight radar used for supporting tactical operations. This compact radar system is ideal for equipping a variety of manned and unmanned aerial system platforms for mission- critical tactical reconnaissance that includes through-the-weather surveillance, target detection and tracking, maritime search, and dismounted personnel detection. The Starlite system significantly improves battlefield situational awareness, and optimizes force maneuver and engagement for mission success.

Our View

Northrop Grumman’s Mission Systems unit, which manufactures and provides technical services for its various radar systems, reported third-quarter 2018 revenues of $2.91 billion that moved up 2.6% year over year. We believe that the latest contract will allow this business unit to generate similar solid results in the upcoming quarters.

Per Markets and Markets Research firm, the global military radar systems market is anticipated to reach $15.42 billion by 2022, at a CAGR of 3.38% from 2017. Such impressive projections should benefit Northrop Grumman, as the company extensively focuses on technological advancements, and upgrading its radar systems.

Price Performance

Shares of Northrop Grumman have declined about 15.5% in a year compared with the industry’s fall of 5.2%. The underperformance may have been caused by the intense competition the company faces in both domestic and international markets.

Zacks Rank & Other Stocks to Consider

Northrop Grumman currently carries a Zacks Rank #2 (Buy).

A few top-ranked companies in the same sector are AeroVironment, Inc. (AVAV - Free Report) , Lockheed Martin Corp. (LMT - Free Report) and The Boeing Company (BA - Free Report) .

While AeroVironment and Lockheed Martin sport a Zacks Rank #1 (Strong Buy), Boeing carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AeroVironment came up with average positive earnings surprise of 257.01% in the last four quarters. The Zacks Consensus Estimate for fiscal 2019 earnings has increased 33.3% to $1.48 in the past 90 days.

Lockheed Martin came up with average positive earnings surprise of 13.92% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has increased 2.47% to $19.42 in the past 90 days.

Boeing came up with average positive earnings surprise of 28.01% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has increased 4.53% to $19.42 in the past 90 days.

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