Northrop Grumman Wins Navy Deal To Support E-2D Hawkeye Jet

Northrop Grumman Corp.’s (NYSE:NOC) business unit, Aerospace Systems, recently clinched a contract for providing repair coverage to eight items that are part of the E-2D Advanced Hawkeye System. The deal was awarded by the Naval Supply Systems Command Weapon Systems Support, Philadelphia, PA.

Valued at $23.3 million, the agreement is expected to be completed by December 2020 and will be carried out in Woodland Hills, CA and Syracuse, NY.

A Brief Note on Hawkeye Aircraft

Hawkeye is an airborne, all-weather, tactical, early-warning aircraft used by the U.S. Navy. E-2D is the fourth version of the E-2 Hawkeye. The technology and gadgets fitted in this aircraft increase its visibility on targets far away. Notably, the E-2D Advanced Hawkeye has a structurally distinctive design — a rotating rotodome and four vertical stabilizer tail configurations — that provide 360-degree surveillance at all times.

Northrop Grumman is also supported by other industry leaders on this program. Lockheed Martin’s (NYSE:LMT) unit — Lockheed Martin Naval Electronics and Surveillance Systems — supplies the principal AN/APY-9 radar system for the Hawkeye. L-3 Technologies’ (NYSE:LLL) unit supplies the ultra-high frequency electronically scanned array antenna. Meanwhile, Raytheon’s (NYSE:RTN) Space and Airborne Systems provides the T-56-A engines.

Northrop Grumman Prospects

Northrop Grumman’s Aerospace Systems unit develops and designs military aviation aircraft, manned aircraft, autonomous systems and spacecraft. These product lines allow the division to receive a steady inflow of contracts from the Pentagon and the foreign allies of the United States. As a result, this segment has been witnessing solid top-line growth.

In the fourth quarter of 2018, the Aerospace Systems unit generated 6% revenue growth, with the Hawkeye jet being one of the contributors to its top-line performance. With the E-2D Hawkeye Aircraft being a significant defense program for the government of the United States, we can expect more contract inflows like the latest one in the near future.

This product line of Northrop Grumman also enjoys a solid demand globally. Evidently, at the end of the third quarter, Japan announced its decision to purchase nine more E-2D Advanced Hawkeye jets, bringing the nation’s total planned E-2D purchase to 13 aircraft. Such developments should enable the Aerospace Systems unit to deliver impressive performance in the upcoming quarters as well.

Furthermore, the fiscal 2019 defense budget provisioned major war-fighting investments worth $21.7 billion for aircraft programs. Such inclusions highlight solid growth prospects for Northrop Grumman’s Aerospace segment in terms of contract wins.

Price Performance

Shares of Northrop Grumman have gained 13.2% in the past six months.

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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