Northrop Grumman To Provide Support Services To Triton UAS

Northrop Grumman Corp.’s (NYSE:NOC) subsidiary, Northrop Grumman Systems Corp., recently secured an $89.5-million contract related to MQ-4C Triton Unmanned Aircraft System (UAS). Per the agreement, the company will provide sustainment and engineering services for supporting the MQ-4C Triton UAS.

Details of the Deal

Per the deal, the company will also offer expert technical support to ensure that the MQ-4C UAS is mission-capable, and fully sustained for air vehicles and mission control operations. Majority of the work related to the deal will be executed in Patuxent River, MD.

The entire work is expected to be completed by March 2020. The contract was awarded by the Naval Air Systems Command, Patuxent River, MD.

Advantages of Triton UAS Air Vehicles

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 equipped with a robust mission sensor suite that provides 360-degree coverage on all sensors, providing unprecedented maritime domain awareness for the U.S. Navy.

Triton UAS supports a wide range of missions, including maritime ISR patrol, signals intelligence, search and rescue, and communications relay. This is because Triton incorporates a reinforced airframe for increased internal payload along with de-icing and lightning protection systems, which allows the aircraft to descend and ascend through harsh maritime weather environments to gain close view of ships and other targets at sea.

What’s Favoring Northrop Grumman?

Cost effectiveness compared with manned aircraft, and zero mortality that UAS offers have been driving demand for military drones. Triton, being one of the next-generation UAS, no doubt has been reaping the benefits of this increase in demand.

To this end, it is imperative to mention that during the fourth quarter of 2018, Northrop Grumman’s Aerospace Systems sales increased a solid 6% year over year to which the Triton program was one of the major contributors. We believe that strong order flow for Triton, like the latest one, will boost this segment’s growth in the days ahead.

Now, the global unmanned aerial vehicle (UAV) market is projected to see a CAGR of 14.5% during the 2018-2025 period to reach a value of $52.3 billion (per Markets and Markets research firm). This growth can be specifically attributed to the increased requirement of UAVs for Intelligence, Surveillance, and Reconnaissance (ISR) purposes, combat operations and for battle damage management. Such projections indicate improved growth opportunities for UAV makers like Northrop Grumman in the years to come.

Price Performance

Shares of Northrop Grumman have dropped about 19.1% in a year compared with the industry’s decline of 0.1%.

Zacks Rank & Stocks to Consider

Northrop Grumman currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same sector are The Boeing Company (NYSE:BA) , Spirit Aerosystems Holdings (NYSE:SPR) and Heico Corporation (NYSE:HEI) .

While Boeing and Spirit Aerosystems presently sport a Zacks Rank #1 (Strong Buy), Heico carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Boeing came up with average positive earnings surprise of 17.08% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 11.3% to $20.13 in the past 90 days.

Spirit Aerosystems’ long-term growth estimates currently stand at 7.80%. The Zacks Consensus Estimate for 2019 earnings has risen 3.7% to $7.56 in the past 90 days.

Heico Corporation’s long-term growth estimates currently stand at 12.10%. The Zacks Consensus Estimate for 2019 earnings has risen 7% to $2.14 in the past 90 days.

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