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Northrop Wins $75M Deal, Supports Fixed-Wing Fleet Missions

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Northrop Grumman Corp.’s NOC recently secured an order related to operational requirements for logistics support services with regard to the government-owned fixed-wing fleet performing special electronic missions.

Valued at $75 million, the contract was awarded by U.S. Army Contracting Command, Redstone Arsenal, Alabama. The company will execute the work in Herndon, VA, and expects to complete services by February 2027.

Northrop Grumman Prospects

Northrop Grumman has a strong presence in Air Force, Space & Cyber Security programs. Its product line is well positioned in high priority categories such as defense electronics, unmanned aircraft and missile defense. Moreover, the fiscal 2019 defense budget includes $686.1 billion as funding for the Pentagon reflects 5% real growth over the initial President’s budget for fiscal 2018. Such increased spending levels for the nation’s defense contractors are expected to lend a solid boost to Northrop Grumman.

With the growing demand for logistics support services in U.S. Government corridors, we expect to witness more of such contract inflows in the near future. These contracts alongside others should enable the company to deliver some impressive results in the upcoming quarters as well.

The strategic buyout of rocket and missile maker Orbital ATK for $9.2 billion will enable Northrop Grumman to enhance its product portfolio and capability in manufacturing technologically advanced combat platforms. It will also benefit from Orbital ATK’S knowledge and expertise in satellites, spacecraft components and commercial space-launch systems. Moreover, the consolidation is expected to result in a strong combined cash flow generation that will allow Northrop Grumman to innovate more such notable weaponries for the United States.

Price Performance

Over the past month, shares of Northrop Grumman have inched up about 1.5%, underperforming the industry’s growth of 4.3%.

Zacks Rank & Key Picks

Northrop Grumman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. A few better-ranked stocks in the same sector are AeroVironment, Inc. AVAV, FLIR Systems, Inc. FLIR, and American Outdoor Brands Corporation AOBC. While AeroVironment and FLIR Systems sport a Zacks Rank #1, American Outdoor Brands carries a Zacks Rank #2 (Buy).

AeroVironment pulled off an average earnings surprise of 365.27% in the trailing four quarters. The Zacks Consensus Estimate for 2018 bottom line per share has moved 22.5% north to $1.36 over the past 30 days.

FLIR Systems delivered an average beat of 8.94% in the previous four quarters. The Zacks Consensus Estimate for current-year earnings has been raised 0.5% to $2.22 per share over the past 30 days.

American Outdoor Brands came up with an average positive surprise of 65.71% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has been revised 24.1% upward to 67 cents per share over the past 30 days.

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