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Northrop Grumman Wins $958M Deal for Radar Units Production

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Northrop Grumman Corp.’s (NOC - Free Report) business subsidiary, Northrop Grumman Systems Corp., recently secured a contract worth $958 million for the production of 30 Ground/Air Task Oriented Radar (G/ATOR) units, including related spare parts and retrofit kits. The contract was awarded by
the Marine Corps Systems Command, Quantico, VA.

Majority of the work will be conducted in Linthicum, MD; East Syracuse, NY, and other locations across the United States. Work related to the deal is expected to get completed by Jan 13, 2025.

A Brief Note on Ground/Air Task Oriented Radar (G/ATOR)

Northrop Grumman's G/ATOR is a single materiel solution for the mobile Multi-Role Radar System and Ground Weapons Locating Radar (GWLR) requirements. Its AN/TPS-80 G/ATOR system is a three-dimensional, short/medium-range, multi-role radar that provides multi-faceted detection and tracking capabilities for detecting unmanned aerial systems, cruise missiles, air breathing targets, rockets, artillery and mortars.

What Favors Northrop Grumman?

During recent times, the demand for military radar systems have been on the rise, primarily resulting from growing cross-border disputes and rising global geo-political instabilities. This has been benefiting defense giants like Northrop Grumman, which specializes in manufacturing radar systems and related spares, in the form of frequent contract wins like the latest one.

Evidently, during the first quarter of 2019, the company's Mission Systems unit, which specializes in the development of radar systems, bagged awards worth $5 billion in airborne radar. Such impressive numbers will have a significant impact on revenues, going forward.

Per Markets and Markets Research, the global military radar market is expected to reach $15.42 billion by 2022 at a CAGR of 3.38%. This, in turn, will increase the demand for ground and air-based radar systems. As one of the premier defense giants in the United States, Northrop Grumman is expected to benefit a great deal from such projections, given the huge opportunity for expansion ahead.

Price Performance

Shares of the company have gained 15.3% in the past six months compared with the industry’s growth of 11.1%.

Zacks Rank & Other Key Picks    

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

A few other top-ranked stocks in the same sector are Wesco Aircraft Holdings (WAIR - Free Report) , Lockheed Martin Corporation (LMT - Free Report) and Leidos Holdings
(LDOS - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wesco Aircraft’s long-term growth estimates currently stand at 12%. The Zacks Consensus Estimate for 2019 earnings has increased 3.7% to 84 cents in the past 60 days.

Lockheed Martin came up with average positive earnings surprise of 17.35% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has increased 5.39% to $20.53 in the past 60 days.

Leidos Holdings came up with average positive earnings surprise of 6.81% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 1.54% to $4.60 in the past 60 days.

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