Northrop in $52M U.S. Army Deal - Analyst Blog

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Northrop Grumman Corporation ( NOC ) has received an order from the Virginia Contracting Activity of the U.S. Army to provide support to the Regional Joint Intelligence Training Facility ("RJITF"). The total deal is valued at $52 million, including the customary one-year base period and four one-year extension options.

Per the agreement, Northrop Grumman will provide training and educational support to the armed forces of the U.S., The North Atlantic Treaty Organization ("NATO") and its European and African allies.

Since the past decade, the U.S. Army has been imparting training and professional knowledge to intelligence work forces of its European Union and African Commands and to that of its international partner countries, as part of the RJITF program.

These skilled and effective work forces will help the leadership of the U.S. defense establishments and its allied nations to take proper decisions in dynamic operational situations. This facility enables the U.S. and its allies to mitigate their domestic and international operational challenges and at the same time strengthen homeland security.

This kind of technical assistance is provided by Northrop Grumman's Technical Services Division. This segment provides long-term technical services, systems support, and training and program engineering. In the first quarter of 2012, this segment generated revenue of $750 million, constituting 12% of Northrop Grumman's total sales.

Northrop Grumman has a strong track record when it comes to providing training assistance to national and international armed forces, and has been awarded contracts regularly. Last month, the company received a three-year indefinite delivery, indefinite quantity contract, worth $84 million, from the U.S. Navy. Per the agreement, the company will provide planning and assessment, curriculum development, and computer-based modeling and simulation training solutions to the Naval Education Training Command.

We believe that Northrop Grumman is well positioned with a strong presence in the areas of cyber security, defense modernization and homeland security systems, intelligence, surveillance and reconnaissance systems, sophisticated electronics and software development.

The company's backlog is expected to see further upside in the near future through unmanned aerial vehicle ("UAV") platforms, including Broad Area Maritime Surveillance ("BAMS"), and Fire Scout and Navy Unmanned Combat Air System ("UCA").

Apart from that, Northrop Grumman's product line in high priority categories like defense electronics, unmanned aircraft and missile defense, gives the company an edge over its peers like General Dynamics Corporation ( GD ) and Lockheed Martin Corporation ( LMT ).

Northrop Grumman Corporation currently retains a Zacks #2 Rank, which translates into a short-term Buy rating.

Los Angeles-based Northrop Grumman Corporation is a leading global security company, providing innovative systems, products and solutions in aerospace, electronics, information systems, and technical services to government and commercial customers worldwide.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: GD , LMT , NOC

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