Northrop Grumman Corporation
) E-2D Advanced Hawkeye has received approval from the Office of
the Secretary of Defense ("OSD") for full-rate production as the
aircraft has been proved to be suitable and effective for
operations. The OSD has reached this decision after a successful
10-month initial operational test and evaluation (IOT&E)
conducted by the U.S. Navy.
The IOT&E is conducted by the U.S. Navy's Air Test and
Evaluation Squadron One for every new system. This is a rigorous
phase of testing in order to determine that the new system is
operationally effective and suitable for fleet introduction. When
the system clears this testing, it is allowed for full-rate
production that leads to a multiyear procurement of the system.
Designed and manufactured by Northrop Grumman, the E-2D Advanced
Hawkeye is the newest variant of the E-2 aircraft platform. It
comprises of a high-tech radar with a two-generation leap. It
also has an upgraded aircraft system that increases speed. To
date, the company has delivered nine E-2Ds to the U.S. Navy on or
ahead of schedule. Also, 11 additional aircrafts are in various
stages of manufacturing and pre-delivery flight testing.
E-2D is a multi-mission platform. Through its ability to
coordinate concurrent missions, E-2D can provide land force
support, rescue operations, and manage a reliable communications
network between widely dispersed nodes. Hawkeye's new glass
cockpit and tactical fourth operator display provide the
five-person crew more flexibility in fulfilling the diversified
nature of work. Moreover, its ability to work near the coastline
as well as over land helps in protecting the nation's interests.
The E-2D industry team is focused on providing the most capable
and cost-effective airborne early warning and command and control
solution to its customers. The approval would help the company in
performing the contracts on schedule.
Northrop Grumman is a leading global security company providing
innovative systems, products and solutions in unmanned systems,
cybersecurity, Command, Control, Communications, Computers,
Intelligence, Surveillance and Reconnaissance (C4ISR), and
logistics and modernization to government and commercial
Northrop's product line is well positioned in high priority
categories, such as defense electronics, unmanned aircraft and
missile defense. Revenue and earnings growth continue to be
driven by its strong presence in the current focus areas of cyber
security, modernization of defense and homeland security assets,
intelligence, surveillance and reconnaissance systems, advanced
electronics and software development.
Recently, the company released fourth quarter and full year
results. The company reported earnings of $2.06 per share
compared with $1.85 per share in the fourth quarter of 2011. The
reported figure also comfortably surpassed the Zacks Consensus
Estimate of $1.74 per share. Sales for the reported quarter
decreased 0.5% year over year to $6.5 billion. However, sales
came in above the Zacks Consensus Estimate by $154 million.
The upbeat earnings will however be tempered by apprehension
regarding defense cutbacks on high-cost platform programs,
over-exposure to the DoD budget, lower backlog, cost over-runs
and reductions in the Afghanistan and Iraq operations. The
company presently retains a short-term Zacks Rank #3 (Hold).
Other stocks to consider are
Huntington Ingalls Industries, Inc.
) that carries a Zacks Rank #1 (Strong Buy) and
Esterline Technologies Corp.
Lockheed Martin Corporation
) with a Zacks Rank #2 (Buy).
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