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Northrop Wins $148.3M E-2D Hawkeye Modification Contract - Analyst Blog

Zacks Equity Research
Updated

Northrop Grumman Corporation NOC announced that it has won a $148.3 million modification contract from the U.S. Navy. The contract, a modification to the initial E-2D Advanced Hawkeye multi-year contract, is for obtaining one E-2D Full-Rate Production Advanced Hawkeye aircraft.

The contract work is expected to be over by July 2018 and the contracting activity is the Naval Air Systems Command, Patuxent River, MD.

Hawkeye is an airborne, all-weather, early warning system used by the U.S. Navy. E-2D is the fourth version of the E-2 Hawkeye aircraft. The technology and gadgets fitted in this aircraft increases its visibility for targets farther away. E-2D Advanced Hawkeye’s structurally distinctive design – a rotating rotodome and four vertical stabilizer tail configuration – helps provide 360-degree surveillance at all times.

The Hawkeye jets, which have been used for several purposes like surveillance and tracking of missiles, proved itself indispensable to the Navy in recent times. In fact, the FY16 defense budget proposal sought funding for five E-2D jets, emphasizing intelligence, surveillance and reconnaissance (“ISR”) activities in light of rising security threats.

Moreover, growing terrorism and President Obama’s budget proposal has made other countries realize the imminent need for ISR technologies. This stands to be immensely beneficial for Northrop.

Recently, the Japanese Ministry of Defense selected Northrop’s E-2D Hawkeye aircraft to strengthen its ISR capabilities.

Northrop recently posted upbeat performance in the fourth quarter of 2014 with both the top and bottom lines beating estimates. The company expects 2015 diluted earnings per share in the $9.20 to $9.50 range, higher than $8.93 per share earned in 2014.

Northrop currently has a Zacks Rank #2 (Buy). Other favorably-placed stocks in the same sector include Rockwell Collins Inc. COL, Spirit AeroSystems Holdings, Inc. SPR and Huntington Ingalls Industries, Inc. HII, all carrying the same rank as Northrop.


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