Northrop's (NOC) Arm Wins Deal for E-2D Advanced Hawkeye
Northrop Grumman Corporation’s NOC business unit, Northrop Grumman Systems Corp., recently clinched a modification contract, involving the E-2D Advanced Hawkeye aircraft. Valued at $353.6 million, the contract is projected to be completed in April 2027.
Details of the Deal
The deal has been awarded by Naval Air Systems Command, Patuxent River, MD. Per the deal, Northrop Grumman System will produce and deliver three E-2D Advanced Hawkeye aircraft to the government of France.
The work involved in the deal will be carried out in multiple locations. The contract will serve the government of France.
Benefits of E-2D Advanced Hawkeye Aircraft
Northrop Grumman’s E-2D Advanced Hawkeye Aircraft is equipped to provide battle management, theater air, missile defense and multiple sensor fusion capabilities in an airborne system, which offers the warfighter expanded battlespace awareness, especially in the area of information operations.
Additionally, through its effective radar sensor and a robust network enabled capability, Advanced Hawkeye provides critical, actionable data to joint forces and first responders. All these factors spurred demand for the E-2D Advanced Hawkeye Aircraft and ensued several contract wins for the company, involving the fleet.
Notably, the French Navy has been operating the E-2C Hawkeye since 1998 and is the only country other than the United States to operate its E-2 Hawkeye from an aircraft carrier. In January 2021, the French Navy took the legacy ahead by procuring three E-2D aircraft from the company. Moreover, the advanced features offered by the aircraft have enabled it to win more such contracts from the French Navy, involving the E-2D Advanced Hawkeye Aircraft. The latest contract win is a testament to that.
Growth Prospects
A rise in geo-political tensions globally have led countries to strengthen their defense system. This has led to huge demand for defense products. Consequently, military aircraft have also recorded a surge in demand over the past few years. This has resulted in huge demand for Northrop Grumman’s E-2D Hawkeye Aircraft due to its integrated tactical and logistical advanced features along with an efficient radar system.
Per the Research and Markets report, the military aircraft market is projected to grow at a CAGR of 4.5%. This should benefit Northrop along with other prominent defense majors like Lockheed Martin LMT and L3Harris Technologies LHX as they play a significant role in manufacturing the E-2D fleet.
Lockheed Martin provides the AN/APY-9 radar to the Advanced Hawkeye program. The APY-9 provides enhanced airborne command, control and expanded surveillance for the Navy’s E-2D aircraft. It is an all-weather, airborne early warning radar designed to detect small, highly maneuverable targets in the dense littoral and overland environments.
The Zacks Consensus Estimate for Lockheed Martin’s 2021 earnings per share indicates growth of 2.4% from the prior-year figure. Its long-term earnings growth rate stands at 3.56%. LMT’s shares have returned 1% in the past month.
L3Harris Technologies’ OE-585/A antenna group was designed for an E-2D Advanced Hawkeye installation and has been fielded for nearly 10 years. This state-of-the-art AEW antenna incorporates a broadside end-fire linear radar array with a co-located/co-aligned IFF linear array.
The long-term growth rate of L3 Harris Technologies is pegged at 6.44%. LHX’s shares have rallied 12.5% in the past year.
Peer Moves
One stock that could reap the benefits of solid growth projection in the military aircraft market is Airbus Group EADSY. Airbus Group’s military aircraft comprises the A400M, the C295 tactical transporter, the new-generation A330 Multi Role Tanker Transport and the Eurofighter, the most modern swing-role fighter ever conceived.
The Zacks Consensus Estimate for Airbus Group’s 2021 earnings indicates year over year growth of 3.9%. Shares of EADSY have returned 13% in the past year.
Price Movement
In the past year, shares of Northrop Grumman have rallied 27.2% compared with the industry’s decline of 32%.
Image Source: Zacks Investment Research
Zacks Rank
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.
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