Northrop Grumman Corp. NOC recently clinched a contract involving E-2D Advanced Hawkeye aircraft. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.
Details of the Deal
Valued at $458.2 million, the contract is expected to be completed by September 2028. Per the terms of the deal, Northrop Grumman will provide the retrofit installation of the cockpit technical refresh and theater combat identification. This will replace the current integrated navigation, controls and display systems and tactical mission computer and display systems on E-2D Advanced Hawkeye aircraft.
Majority of the work related to this deal will be carried out in Melbourne, FL.
Importance of E-2D Advanced Hawkeye
Northrop’s E-2D Advanced Hawkeye is an all-weather, carrier-capable tactical airborne early warning aircraft that boasts battle management, theater air, missile defense and multiple sensor fusion capabilities in an airborne system. These offer the warfighter expanded battlespace awareness, especially in the area of information operations.
Through its mechanical and electronic scanning radar capabilities and robust network-enabled capability, Advanced Hawkeye provides critical, actionable data to joint forces and first responders. In addition, it has an entirely new avionics suite, mission computer, integrated satellite communications, flight management system, improved engines, a glass cockpit and aerial refueling.
Such features make it attractive for the military, thus resulting in NOC winning multiple orders for the same, like the latest one. These orders are likely to boost the revenue-generation prospects of Northrop.
What Favors Northrop?
Increasing geopolitical tensions worldwide have prompted nations to increase their defense spending manifold. With rapid technological upgrades, military aircrafts’ demand has surged, making it an integral part of any air defense system.
Per a report from the Mordor Intelligence firm, the global military aviation market is expected to grow from $52.17 billion in 2023 to $74.44 billion by 2028, witnessing a CAGR of 7.4% during 2023-2028. Such massive growth projections indicate solid opportunities for NOC, which has a wide range of manned and unmanned aircraft that already enjoys an established position in the military aircraft market.
Peer Prospects
Considering the solid growth opportunities offered by the global military aviation market, other defense primes like Lockheed Martin Corp. LMT, Airbus SE EADSY and Textron Inc. TXT should also benefit.
Lockheed designs and integrates systems and manufactures the most agile and effective aircraft. Its Aeronautics segment’s major programs include the F-35, C-130 Hercules, F-16 Fighting Falcon and F-22 Raptor jets.
LMT has a long-term earnings growth rate of 6.5%. The Zacks Consensus Estimate for LMT’s 2023 sales indicates growth of 1% from the prior-year reported figure.
Airbus Group’s military aircraft consists of the A400M, the C295 tactical transporter, the new-generation A330 Multi Role Tanker Transport and the Eurofighter, the most advanced swing-role fighter ever conceived.
Airbus’ long-term earnings growth rate is pegged at 12.4%. The Zacks Consensus Estimate for EADSY’s 2023 sales indicates growth of 17.8% from the prior-year reported figure.
Textron’s military aircraft includes the Beechcraft T-6 training aircraft and the Beechcraft AT-6 light-attack aircraft. The company also manufactures the Beechcraft Model 18 light bomber, the T-44 and T-34 training aircraft and the T-1A jet trainer.
TXT boasts a long-term earnings growth rate of 11.7%. The Zacks Consensus Estimate for TXT’s 2023 sales indicates an improvement of 7.7% from the prior-year reported figure.
Price Performance
In the past six months, shares of NOC have lost 5% compared with the industry’s 10.7% decline.
Image Source: Zacks Investment Research
Zacks Rank
Northrop Grumman currently has 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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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
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