Aerospace and defense company Northrop Grumman Corporation (NOC) received three orders from different U.S. defense departments. The combined value of the contracts touched $273.1 million. The largest contract worth $198.9 million came in from the U.S. Navy while a minor $11.9 million order was received from the Defense Advanced Research Project Agency.
Per the U.S. Navy contract, Northrop will be entrusted with the responsibility to design, develop, and implement the Airborne Electronic Attack requirements for software configuration and ancillary hardware in support of the EA-6B and EA-18G aircraft for the U.S. and the government of Australia. The U.S. Navy will pay 90% of the total contract and the rest will be paid by the Australian government. The work on this contract is expected to be completed by Jul 2019.
Lockheed also won a $62.3 million contract from the U.S. Army. Per the contract, Northrop will provide support to the National Training Center. The work will be done at the Fort Irwin, CA military base, with completion expected by May 31, 2015.
Northrop’s diverse product offering enables it to win consistent contracts from the U.S. Department of Defense and allied countries. Last month, Northrop received a multi-year contract worth $3.6 billion from the U.S. Navy to supply 25 new E-2D Advanced Hawkeye aircraft. The Hawkeye aircraft is an airborne, all weather, early warning system used by the U.S. Navy.
The big defense spenders across the globe are trying to curtail their defense budgets, which could impact the future prospects of large defense companies. However, Northrop’s capability to win contracts at regular intervals allowed it to post strong performances. Northrop surpassed the Zacks Consensus Estimate in the last four quarters with an average beat of 9.99%.
As far as the current performance is concerned, it is likely that Northrop will be able to keep its surprise streak alive in the second quarter. The long-term earnings growth rate is pegged at 7.39%. The Zacks Consensus Estimate for 2014 of $9.23 per share reflects year-over-year growth of 17.11%.
Northrop Grumman currently carries a Zacks Rank #2 (Buy). Other well-placed operators in the aerospace and defense industry include Lockheed Martin Corporation (LMT), Huntington Ingalls Industries, Inc. (HII) and Embraer SA (ERJ). All these stocks carry the same Zacks Rank as Northrop Grumman.