Northrop Wins DoD Contracts

Zacks

Northrop Grumman Corporation (NOC) has won two contracts from the U.S. Department of Defense (DoD). The total deal was valued at $522.3 million. In this occasion, the U.S. DoD has awarded 29 separate orders worth $1.75 billion.

In the first contract worth $490 million, Northrop will offer follow-on support on interoperability of dissimilar training systems to fulfill the U.S. Air Force’s training needs. This agreement is part of the Combat Air Force Distributed Mission Operations and Integration program.

The company’s unit Northrop Grumman Information Systems will be responsible for this program. The activities will take place in Northrop’s facility at Orlando, Fla. and are scheduled to be completed by Jun 30, 2018 with an option to be extended till Jun 30, 2023.

In the second contract, Northrop’s unit Integrated Systems has received an award worth $32.3 million from the U.S. DoD. Per the agreement, the company will supply spares to support five E-2D Advanced Hawkeye Full Rate Production Lot 1 Aircraft. The contract is expected to be completed by Dec 2016.

Northrop has a long-standing business association with the U.S. defense establishments. Recently, the company received a contract, worth $115 million, from the U.S. DoD to supply 16 units of AN/APG-68 (V) 9 radar systems to the Royal Thai Air Force and 22 units of AN/APG-68 (V) 9 radar systems to the Republic of Iraq.

Northrop is flooded with a number of contracts from several government establishments and had a total backlog of $39.4 billion at the end of first-quarter 2013. Recently, the company managed to get few significant contracts. In May 2013, Northrop won a contract, worth $555.6 million, from the DoD to upgrade Global Hawk.

The defense operators’ performance primarily depends on the orders coming from the national and international defense establishments. With the risk of U.S. defense budget-cuts looming large. We believe the defense companies’ endeavor toward wining overseas orders will allow them to offset the decline in domestic orders.

Northrop is slated to release its second-quarter 2013 earnings on Jul 22, 2013. The Zacks Consensus Estimate for second-quarter 2013 is currently $1.71 per share.

Northrop currently has a Zacks Rank #2 (Buy). Other stocks from the sector that are presently performing well include The Boeing Company (BA), Alliant Techsystems Inc. (ATK) and Exelis, Inc. (XLS) with a Zacks Rank #2 (Buy).

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