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Northrop (NOC) Secures a Contract to Aid E-2D Hawkeye Jet Program

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Northrop Grumman Corp.’s (NOC - Free Report) business segment, Northrop Grumman Systems, recently clinched a contract involving its E-2D Advanced Hawkeye aircraft. The award has been provided by the Naval Supply Systems Command Weapon Systems Support, Philadelphia, PA.

Details of the Deal

Valued at $41 million, the contract is projected to be completed by July 2030. Per the terms of the deal, Northrop will procure four E-2D rotodome spares to enhance the E-2D advance capabilities used on the E-2D Advanced Hawkeye jets.

Work related to this deal will be executed in Melbourne, FL.

What’s Favoring Northrop?

In this era of modern warfare, military jets play a crucial role in strengthening a nation’s defense arsenal. Impressively, today’s combat jets boast the capability to serve multiple missions, including air-to-air combat, air-to-ground attacks, maritime operations and even nuclear delivery. Therefore, as increasing geopolitical threats are prompting nations across the globe to reinforce their military capabilities, combat aircraft are witnessing a solid demand. This, in turn, has been ushering in frequent order flows for major combat aircraft manufacturers like Northrop. The latest contract win is a testament to that.

Notably, Northrop’s E-2D Hawkeye aircraft boasts battle management, theater air, missile defense and multiple sensor fusion capabilities in an airborne system. These provide the warfighter with expanded battlespace awareness, especially in the area of information operations.

The E-2D Hawkeye aircraft comes with some remarkable developments like the True 360-degree radar coverage, which provides uncompromised all-weather tracking and situational awareness. Moreover, the Advanced Hawkeye aircraft provides critical, actionable data to joint forces and first responders by utilizing the aircraft’s robust network-enabled capability.

Such features make the E-2D Hawkeye aircraft an attractive choice for the military, resulting in NOC winning multiple orders for the same, like the latest one. Such orders are likely to boost Northrop’s revenue generation prospects in the military aircraft business arena.

NOC’s Growth Prospects

Factors like increasing defense spending by developed nations, rising defense investment from emerging economies, rapidly rising geopolitical tensions worldwide like the ongoing hostility in the Middle East, and the rising incorporation of technology to elevate both the quality and efficiency of the new-age military jets have been bolstering the growth prospects of the combat jet market.

This must have prompted the Morder Intelligence firm to project a CAGR of 3.7% for the global fighter aircraft market in the 2024-2029 period. Such growth prospects should benefit Northrop, as its product portfolio offers a wide range of manned and unmanned aircraft that already enjoys an established position in the military aviation market.

Since the 1930s, the company has been offering varied manned aircraft solutions to global customers worldwide. These solutions range from fighter jets and stealth bombers to surveillance and electronic warfare. Notably, apart from E-2D, NOC builds the B-2 Spirit Stealth Bomber jet, which is the only long-range penetrating stealth bomber in the U.S. arsenal.

Opportunities for Peers

The abounding growth prospects of the global fighter market should also benefit other prominent defense majors like Lockheed Martin (LMT - Free Report) , Boeing (BA - Free Report) and Textron (TXT - Free Report) that manufacture combat jets.

Lockheed Martin’s Aeronautics segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of advanced military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies. Its major programs include the F-35 Lightning II Joint Strike Fighter jet, the C-130 Hercules airlifter, the F-16 Fighting Falcon jet and the F-22 Raptor jet.

LMT’s long-term earnings growth rate is 4.1%. Shares of LMT have returned 3.8% to its investors in the past year.

Boeing’s Defense, Space & Security segment’s primary products include fixed-wing military aircraft, F/A-18E/F Super Hornet, F-15 programs, P-8 programs, KC-46A Tanker and T-7A Red Hawk. The segment also manufactures rotorcraft and rotary-wing programs, such as CH-47 Chinook, AH-64 Apache and V-22 Osprey.

Boeing’s long-term earnings growth rate is 25.5%. The stock boasts a four-quarter average earnings surprise of 17.83%.

Textron’s business unit, Textron Aviation Defense, designs, builds and supports versatile and globally known military aircraft preferred for training and attack missions. Some of Textron’s renowned products include the Beechcraft T-6C trainer and the AT-6 Wolverine.

The company boasts a long-term earnings growth rate of 10.1%. The Zacks Consensus Estimate for 2024 sales indicates growth of 5.7% from the previous year’s reported number.

Price Movement

In the past six months, shares of Northrop have lost 6.5% compared with the industry’s 9% decline.

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Zacks Rank

Northrop 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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