Northrop Grumman Corp.’s NOC subsidiary, Northrop Grumman Systems Corp., recently secured a contract for providing fleet support to the Hunter unmanned aircraft system (UAS). The deal is expected to be completed by May 9, 2020.
Valued at $163.9 million, the contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL. Per the terms of the deal, the company will conduct operations, maintenance, engineering, re-engineering and remanufacturing of the Hunter unmanned aircraft system.
Work related to the deal will be executed in Sierra Vista, AZ.
Attributes of Hunter Aircraft
Northrop Grumman’s MQ-5B Hunter is a long endurance, medium altitude, multi-mission, tactical UAS. It has been optimized to provide the Army division and corps commanders with a dedicated Intelligence, Surveillance, and Reconnaissance (ISR) capability.
Hunter conducts battlefield surveillance using multiple sensors including its multi-mission EO/IR/LD/LRF/Illuminator and SIGINT payloads. Its multi-payload capability provides enhanced situational awareness and the ability to proactively plan and execute decisive combat operations.
What’s Favoring Northrop Grumman?
Cost effectiveness compared with manned aircraft and zero mortality that UAS offers have been driving demand for military drones. Hunter, being one of the unmanned special mission aircraft solutions offered by Northrop Grumman, no doubt has been reaping the benefits of this increased demand for UAS.
In this regard, it is imperative to mention that Northrop Grumman’s Aerospace Systems sales increased a solid 7% year over year during the first quarter of 2019. Notably, the autonomous programs like the Hunter UAS were one of the major contributors to this upside. Undoubtedly, the latest contract win will allow this segment to continue the momentum in the upcoming quarterly results.
Now, the global unmanned aerial vehicle (UAV) market is projected to see a CAGR of 14.2% during the 2018-2025 period to reach a value of $52.3 billion (per Markets and Markets research firm). This uptick can be specifically attributed to the increased requirement of UAVs for Intelligence, Surveillance, and Reconnaissance (ISR) purposes, combat operations and for battle damage management. Such projections indicate increased growth opportunities for UAV makers like Northrop Grumman in the years to come.
Shares of Northrop Grumman have declined 5.6% in a year compared with the industry’s 0.2% drop.
Zacks Rank & Other Stocks to Consider
Northrop Grumman currently carries a Zacks Rank #2 (Buy). A few other top-ranked stocks in the same space are Leidos Holdings, Inc. LDOS, Lockheed Martin Corp. LMT and Wesco Aircraft Holdings, Inc. WAIR, each carrying a similar rank like Northrop Grumman. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Leidos Holdings delivered average positive earnings surprise of 6.81% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has moved up 1.1% to $4.58 over the past 60 days.
Lockheed’s delivered average positive earnings surprise of 17.35% in the trailing four quarters. The Zacks Consensus Estimate for 2019 earnings has climbed 4.1% to $20.28 over the past 90 days.
Wesco Aircraft’s long-term growth estimate currently stands at 12%. The Zacks Consensus Estimate for 2019 earnings has moved 3.7% north to 84 cents over the past 90 days.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
Wesco Aircraft Holdings, Inc. (WAIR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research