Northrop Grumman Corp.’s (NOC - Free Report) subsidiary, Northrop Grumman Systems Corp., recently secured a $22-million contract to provide sustaining engineering services to the T-38 and F-5 aircraft. The contract was awarded by the Air Force Life Cycle Management Center, Hill Air Force Base, UT.
Work related to the deal will be performed in Clearfield, UT, and is scheduled to get completed by Mar 31, 2024. Northrop Grumman will utilize
fiscal 2019 operations and maintenance funds to complete the task.
A Brief Note on T-38 and F-5
Northrop Grumman’s T-38 Talon is the world's first supersonic jet trainer with twin engines. Currently, more than 500 T-38 Talon’s are operated by the U.S. Air Force and NASA.
The F-5 is a highly maneuverable, reliable supersonic fighter with advanced aerodynamic design, engine performance and low operating costs. The U.S. Navy operates the F-5 in its adversary squadrons to simulate enemy aircraft in aerial combat training exercises.
Recently, the U.S. government proposed its fiscal 2020 defense budget that includes a spending plan of $57.7 billion on aircraft, a massive increase of 166% from the approved fiscal 2019 defense spending on aircraft. If approved, such spending provision should usher in more contracts like the latest one for Northrop Grumman’s T-38 and F-5 aircraft program, going ahead.
Per Research and Markets firm, the global military and defense avionic systems market is expected to see a CAGR of 8.92% by 2020, to reach a value of approximately $142.5 billion. Such growth can be attributed to the rise in terrorist activities accompanied by stacking of arms and weapons in
emerging economies, leading to increased defense expenditures. Northrop Grumman, being a prominent player in this space, is likely to benefit from such favorable projections.
Shares of Northrop Grumman have plunged about 23.3% in a year compared with the industry’s decline of 1.5%.
Zacks Rank & Key Picks
Northrop Grumman currently carries Zacks Rank #3 (Hold). A few better-ranked stocks in the same sector are Spirit Aerosystems Holdings (SPR - Free Report) , AeroVironment, Inc. (AVAV - Free Report) and Heico Corporation (HEI - Free Report) .
While Spirit Aerosystems sports a Zacks Rank #1 (Strong Buy), Heico and AeroVironment carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Spirit Aerosystems’ long-term growth estimates currently stand at 7.8%. The Zacks Consensus Estimate for 2019 earnings has risen 3.7% to $7.56 in the past 90 days.
Heico Corporation came up with average positive earnings surprise of 4.8% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has increased 2.9% to $2.14 in the past 90 days.
AeroVironment’ long-term growth estimates currently stand at 25%. The Zacks Consensus Estimate for 2019 earnings has risen 16.67% to $1.75 in the past 90 days.
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