Northrop, Wynyard Group Join Forces - Analyst Blog

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Northrop Grumman Corporation ( NOC ) announced that it has entered into a strategic alliance with Wynyard Group to market and develop joint offerings to the US public sector and commercial markets.

Wynyard Group is a privately owned company that delivers powerful software solutions in over 90 countries in the essential operating areas of risk management, intelligence, investigations and digital forensics.

The alliance is a win-win situation for both the companies. This strategic alliance combines the market power, resources and expertise of Northrop Grumman with Wynyard's leading specialist knowledge and solutions in risk management, intelligence, investigations and digital forensics.

Going forward, Northrop Grumman's strong balance sheet and cash flows provide substantial financial flexibility and a cushion for improving shareholder value through incremental dividend, ongoing share repurchases and earnings accretive acquisitions. In the third quarter of 2012, the company repurchased 4.4 million shares for approximately $290 million. At the end of the first nine months of 2012, the company had a low long-term debt-to-capitalization of 27.0%. Total long-term debt was approximately $3.9 billion, with no significant maturities in the near term, along with cash holdings of $3.5 billion.

Falls Church, Virginia-based Northrop Grumman Corporation is one of the largest defense contractors in the U.S. The company supplies a broad array of products and services to the U.S. Department of Defense including electronic systems, information technology, aircraft, space technology, and systems integration services. The positive case for Northrop Grumman stems from revenue growth across the board and a broad diversification of programs.

Northrop Grumman offers a strong program portfolio positioned to take advantage of focus areas in the defense space, an improving balance sheet and an ongoing share repurchase program. Also, its product line in high priority categories, such as defense electronics, unmanned aircraft and missile defense, gives Northrop Grumman an edge over competition.

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

Going forward, Northrop Grumman offers a strong program portfolio positioned to take advantage of focus areas in the defense space, an improving balance sheet and an ongoing share repurchase program.

However, these are offset by apprehension regarding defense cutbacks on high-cost platform programs, over-exposure to the DoD budget, lower backlog, cost over-runs and reductions in Afghanistan and Iraq operations.

Like its peers, Embraer SA ( ERJ ) and General Dynamics Corporation ( GD ), the company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.



EMBRAER AIR-ADR (ERJ): Free Stock Analysis Report

GENL DYNAMICS (GD): Free Stock Analysis Report

NORTHROP GRUMMN (NOC): Free Stock Analysis Report

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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: ERJ , GD , NOC

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