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Northrop Grumman Wins $50M Deal for E-2D Advanced Hawkeye Jet

Zacks

Northrop Grumman Corp.’s NOC business unit, Aerospace Systems, recently clinched a modification contract for providing long-lead parts and associated support to the full-rate production of two E-2D Advanced Hawkeye aircraft. The deal was awarded by the Naval Air Systems Command, Patuxent River, MD.

Valued at $50 million, the agreement is expected to be completed by December 2023. Majority of the task will be executed in Syracuse, NY and El Segundo, CA.

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.

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Northrop Grumman is also supported by other industry leaders on this program. Lockheed Martin Corp.’s LMT unit — Lockheed Martin Naval Electronics and Surveillance Systems — supplies the principal AN/APY-9 radar system. For the Hawkeye, L-3 Technologies Inc.’s LLL unit supplies the ultra-high frequency electronically scanned array antenna. Meanwhile, Raytheon Company’s 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 enable 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 third quarter of 2018, the Aerospace Systems unit generated robust revenue growth of 5%, with the Hawkeye jet being a solid contributor 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 Hawkeyes, bringing the nation’s total planned E-2D purchase to 13 aircrafts. Such developments should enable the Aerospace Systems unit to post impressive results in the upcoming quarters as well.

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

Price Performance

In a year’s time, shares of Northrop Grumman have lost 15.5% compared with the industry’s 1.5% decline. The underperformance may have been caused by intense competition that the company faces in domestic and international markets.

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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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
 
L3 Technologies Inc. (LLL) : Free Stock Analysis Report
 
Raytheon Company (RTN) : Free Stock Analysis Report
 
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