Northrop Grumman Corporation
) numbered among the 20 awardees receiving contracts from the
Department of Defense (DoD). The Northrop contract for $113.7
million calls for Full Rate Production of five E-2D Advanced
Hawkeye Lot 2 airborne early warning aircrafts. In total, the DoD
has provided contracts worth $717.7 million.
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Under this advance acquisition fixed price contract Northrop will
be financed for purchase of long-lead materials that are required
to begin full production of these aircrafts. The task is expected
to be completed by Mar 2014.
In Feb 2013, Northrop Grumman received approval from the Office
of the Secretary of Defense ("OSD") for full-rate production as
the aircraft has proved to be suitable and effective for
Designed and manufactured by Northrop Grumman, the E-2D Advanced
Hawkeye is the newest variant of the E-2 aircraft platform. It
comprises of high-tech radar with a two-generation leap. It also
has an upgraded aircraft system that increases speed. The
Advanced Hawkeye manages the Navy's warplanes by recognizing and
keeping track of wanted and unwanted aircrafts while warning the
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.
Northrop has 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. The company is taking
several initiatives to ensure further alignment with its
customers' need in order to increase affordability and cost
competitiveness. It is working on establishing Aerospace Design
Centers of Excellence at its various centers. Going forward,
growth in domestic efforts will be driven by the Navy's Triton
program with international growth supported by Alliance Ground
Surveillance ("AGS") program and continuing efforts on Germany's
EURO HAWK program.
Also, the company seems to be immune to some extent to defense
budget cuts. In fact, the President's fiscal year 2014 budget
supports some of Northrop's key programs. For 2014, the proposed
budget increased funding for Northrop's E-2D Advanced Hawkeye by
25%, while 21 EA-18G Growlers funding got a proposal for double
financing in comparison to 2013. Meanwhile funding for F-35 was
re-affirmed, and programs like SBIRS, Advanced EHF and the James
Webb Space Telescope, Global Hawk Block 30 and Block 40
operations were sufficiently funded. Cybersecurity is a key
investment area with funding increasing by more than 20% to $4.7
The company presently retains a short-term Zacks Rank #2 (Buy).
Other stocks to consider are
Erickson Air-Crane Inc.
Wesco Aircraft Holdings, Inc.
B/E Aerospace Inc.
). While Erickson Air-Crane carries a Zacks Rank #1 (Strong Buy),
Wesco Aircraft and B/E Aerospace carry a Zacks Rank #2 (Buy).