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Northrop Grumman Wins Deal to Upgrade MQ-4C Triton UAS

Zacks Equity Research

Northrop Grumman Corp.’s NOC subsidiary, Northrop Grumman Systems Corp., recently secured a $12.9 million deal pertaining to MQ-4C Triton Unmanned Aircraft System (UAS). Work related to this contract is scheduled to be over by October 2021.

Details of the Deal

Per the deal, the company will upgrade three MQ-4C Triton aircraft from a baseline Integrated Functional Capability (IFC) 3 software configuration to a Multi-IFC 4 software configuration. Majority of the work related to the deal will be executed in Palmdale, CA.

Under the terms of this agreement, Northrop Grumman will also update drawings and associated technical data to support the MQ-4C IFC software configuration upgrade.  The contract was awarded by the Naval Air Systems Command, Patuxent River, MD.

Advantages of Triton UAS Air Vehicles

Northrop Grumman’s MQ-4C Triton UAS is equipped to provide real-time intelligence, surveillance and reconnaissance (ISR) over the vast ocean and coastal regions. The system is also equipped with a robust mission sensor suite that provides 360-degree coverage on all sensors, ensuring unprecedented maritime domain awareness for the U.S. Navy.

Triton UAS supports a wide range of missions including maritime ISR patrol, signals intelligence, search and rescue, and communications relay. This is because Triton incorporates a reinforced airframe for increased internal payload along with de-icing and lightning protection systems, which allows the aircraft to descend and ascend through harsh maritime weather environments to get a close view of ships and other targets at sea.

What’s Favoring Northrop Grumman?

Cost-effectiveness compared with manned aircraft and zero mortality, which UAS offers, have been bolstering demand for military drones. This, in turn, has been driving demand for Triton as it is one of the next-generation UAS.

It is imperative to mention that Northrop Grumman’s Aerospace Systems’ sales increased a solid 6% year over year to which the Triton program was one of the major contributors. We believe that solid order flow for Triton, like the latest one, will boost this segment’s growth in the days ahead.

Now, the global unmanned aerial vehicle (UAV) market is projected to see a CAGR of 14.5% (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 battle damage management. Such projections indicate increased growth opportunities for UAV makers like Northrop Grumman in the years to come.

Price Performance

In a year’s time, shares of Northrop Grumman have plunged about 21% compared with the industry’s 1.2% decline.


Zacks Rank & Stocks to Consider   

Northrop Grumman has a Zacks Rank #4 (Sell).

A few better-ranked stocks in the same sector are Spirit Aerosystems Holdings SPR, AeroVironment, Inc. AVAV and Heico Corporation HEI. While Spirit Aerosystems sports a Zacks Rank #1 (Strong Buy), AeroVironment and Heico 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 estimate currently stands at 7.8%. The Zacks Consensus Estimate for 2019 earnings has climbed 3.7% to $7.56 over the past 90 days.

AeroVironment’ long-term growth estimate currently stands at 25%. The Zacks Consensus Estimate for 2019 earnings has moved 16.67% north to $1.75 over the past 90 days.

Heico Corporation delivered average positive earnings surprise of 4.8% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has moved up 2.9% to $2.14 over the past 90 days.

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Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
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