Northrop Grumman Corporation ( NOC ) received a contract from the U.S. Army Aviation and Missile Research Development and Engineering Center to develop a navigation grade inertial system for the Defense Advanced Research Projects Agency (DARPA). Northrop has been receiving quite a many Department of Defense (DoD) contracts given its diversified product portfolio.
Per the latest contract, the company will develop a miniaturized inertial measurement unit for the Chip-Scale Combinatorial Atomic Navigator program by combining bulk acoustic micro-electro-mechanical system gyro and nuclear magnetic resonance (NMR) gyro technologies. Notably, in addition to improving the NMR gyro technology a new precision optical accelerometer will be developed under this program. The initial value of the contract is $0.65 million which can go up to $13.4 million if multiple options are exercised.
This cost-effective microsystem is designed to reduce the size, weight and power of navigation systems. This system will ensure uncompromised navigation for warfighters, and lower dependence on Global Positing System and other external signals.
Recently, this Zacks Rank #3 (Hold) stock was able to seal a huge DoD contract, regardless of the sequestration effect. Northrop Grumman received a contract worth $9.9 billion from the U.S. Air Force.
Northrop continues with its R&D to develop new systems and technology, which give the country an edge in hostile situations. In 2013, the company's capital expenditure increased 10.0% from the year-ago level. In 2014, the company expects capital expenditure to jump 64.8% to about $600.0 million.
In the first quarter of 2014, Northrop's earnings comfortably surpassed the Zacks Consensus Estimate by 11.6%. During the first quarter earnings release the company increased its diluted earnings per share guidance for 2014 to $8.90-$9.15 from the prior range of $8.70-$9.00. The Zacks Consensus Estimate for 2014 is pegged at $9.22.
Investors interested in the defense industry may consider better-ranked stocks like Embraer SA ( ERJ ), Leidos Holdings, Inc. ( LDOS ) and Lockheed Martin Corporation ( LMT ). While Embraer SA holds a Zacks Rank #1 (Strong Buy), Leidos Holdings and Lockheed Martin hold a Zacks Rank #2 (Buy).