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Northrop (NOC) Wins Navy Deal for AN/ALQ-240 Spare Parts

Northrop Grumman Systems Corp. NOC has been awarded a $15.4 million from the Naval Surface Warfare Center, Crane Division, Crane, IN. Per the terms of the contract, the company is required to supply spare parts for the organic depot repairs of the AN/ALQ-240 Electronic Support Measures system.

Nearly 75% of the contractual work will be carried out at the company’s Linthicum, MD facility. Other facilities where the rest of the operation will be accomplished include San Jose, CA (10%); Ashburn, VA (5%); Baltimore, MD (5%); and Fort Walton Beach, FL (5%). The order is expected to be completed by Oct 2020.

About AN/ALQ-240

Developed by Northrop Grumman, AN/ALQ-240 is an electronic support measures (ESM) system. It is used by the U.S. Navy for its P-8A Poseidon multi-mission maritime patrol aircraft. This ESM system is known to provide rapid detection, classification, and geographical location of ground-based radar systems for situational awareness.

Why Northrop Grumman?

Northrop Grumman has emerged as one of the largest U.S. defense contractor in terms of revenue, with a major platform-centric focus. It holds a strong presence in Air Force, Space & Cyber Security programs. The company’s product line is well positioned in high priority categories, such as defense electronics, unmanned aircraft and missile defense. Northrop Grumman is expected to gain from the U.S. government’s heightened focus on Intelligence Surveillance Reconnaissance (ISR), unmanned systems, force protection, cyber security, and missile defense.

Additionally, the fiscal 2017 budget reflected an annual increase of approximately $2.2 billion for defense expenditure over the fiscal 2016 budget. The increased spending would be allocated to certain key areas that can unlock higher opportunities for Northrop Grumman along with other Aerospace and Defense giants like Lockheed Martin Corp. LMT, The Boeing Co. BA and Huntington Ingalls Industries, Inc. HII.

As a result of increasing opportunities, the company saw a solid 20% earnings growth in the first quarter of 2017. The maintenance of a strong balance sheet and steady cash flow offers substantial financial flexibility and a cushion for an incremental dividend, ongoing share repurchases and earnings accretive acquisitions.

Price Movement

Shares of Northrop Grumman’s have gained 8.8% in the last three months, outperforming the Zacks categorized Aerospace–Defense industry’s gain of 7.2%.

This outperformance might have been driven by the company’s product innovation and focus on strengthening its ISR wing.

Zacks Rank

Northrop Grumman currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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