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Northrop's (NOC) Arm Clinches Deal to Support Triton UAS

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Northrop Grumman Corporation NOC business unit, Northrop Grumman Systems Corp., recently clinched a contract to support MQ-4C Triton unmanned aircraft system (UAS). Valued at $15.8 million, the contract is expectedto be completed in September 2024.

Details of the Deal

The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD. Perthe deal, Northrop Grumman System will offer non-destructive test and inspection support equipment, andassociated non-recurring engineering support for the aircraft.

The majority of the work involved in the deal will be carried out in San Diego, CA and Red Oak, TX. The contract will serve the U.S. Navy and government of Australia.

Benefits of MQ-4C Triton Unmanned Aircraft

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

Triton UAS supports a wide range of missions including maritime ISR patrol, signals intelligence, search and rescue,and communications relay. All these factors keepTriton in demandamongdefense forces.

Growth Prospects

UAS has been gaining importance lately owing to its cost effectiveness compared to manned aircraft andzero mortalityrate. This has resulted inahuge demand for Northrop Grumman’s MQ-4C Triton. The aforementioned deal is a testament to the fact.

Per a report from Research and Markets firm, the military segment of the global unmanned aerial vehicle (UAV) market is projectedtowitnessa CAGR of 9% over a period of 2021-2026. Such massivedemand for military UAVs globally may provide a boost to the growth of defense majors manufacturing UAVs.

It is worth mentioningthat Northrop Grumman,being an expert in UAV manufacturing,has immenseprospectsin the UAV arena. Apart from the aforementioned deal, in March, Northrop Grumman SystemsCorp won a contract worth $82 million to support MQ-4C Triton. Such contract wins will aid the company’s growth in the days ahead.

Apart from Northrop Grumman, other defense majors who will benefit from the growing UAV market are Boeing BA and Lockheed Martin LMT. Boeing’s Insitu unit offers high-performance, low-cost unmanned aircraft systems used for ISR. Thus, leveraging decades of expertise in low observable technology including the RQ-170, Lockheed’s Skunk Works unit has developed survivable, interoperable next generation unmanned aerial system concepts to support future battlespace operations.

Price Movement

In the past one year, shares of Northrop Grumman have gained 7.4% compared with the industry’s growth of 15.5%.

Zacks Investment Research
Zacks Investment Research

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Zacks Rank& a Key Pick

Northrop Grumman currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is Textron TXT,which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Textron delivered an earnings surprise of 32.79% in the last reported quarter.Ithas a long-term earnings growth rate of 28.3%.

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